For the week July corn was 9 cents lower, December corn was down 5 ¾, July soybeans gained 4 ¾, November soybeans added 6 ¾, July soybean meal was $.40 higher, July bean oil lost 84 points, July soft red winter wheatlost 18 ¾, July hard red winter lost 18 ¾, July hard red spring wheat fell 24.
Strong Week in Soybeans on China Hopes
Soybeans ended sharply higher on Friday and posted higher weekly closes on optimism about the outcome of the meeting between President Trump and Chinese President Xi on May 14-15 in Beijing.
Jerry Gulke, president of The Gulke Group, says the market is anticipating additional purchases of U.S. soybeans to be announced at the summit, in addition to other agricultural products.
In late October, Treasury Secretary Scott Bessent said China had agreed to buy 12 MMT of soybeans for the current year and 25 MMT for the three years following. President Trump followed that up with a social media post on February 4 indicating China would be buying an additional 8 MMT of old crop soybeans.
Gulke says Friday’s rally in soybeans was impressive and the technical action for the week was positive as the November contract closed above the March and April highs.
“November took out the March highs early this week, then backed off Wednesday and Thursday, then turned around and went back up again. So, it’s respecting new highs for May. That’s important. If you can stay above the April and March highs like we have and exceed it then you’re probably on to something that’s more long-term. We’ve done that in new crop,” he explains.
July or old crop soybeans filled the gap from the limit down day on March 9 when President Trump announced he was delaying the China summit due to the war in Iran, but could not close above the March high.
He says when a market fails like that it is a concern but if the market is positive enough to close above that gap it’s significant and signals a bigger rally.
So next week will be a pivotal week to see if July soybeans can close above the March high of $12.50 3/4, especially with the big news items hitting the market including the May WASDE and the China summit.
Corn Lower for the Week, Funds Still Long
On the other hand, corn posted lower weekly closes in both the July and December contacts, which is concerning to Gulke.
It may be tied to more acres of corn being planted than what USDA indicated in the March Prospective Plantings report.
Gulke says in talking to his seed dealer, he indicated he had not seen any farmers bring back corn to exchange for soybeans.
“There was a lot of talk about it, but he said nobody really did it in any significance. And so you have a lot of rumors and innuendo, but when you talk to some of the seed corn guys, it wasn’t significant if it was at all.So, apparently, they found inputs,” he states.
Gulke also talked to his fertilizer supplier, who indicated they had enough fertilizer in stock for anyone that did not pre-book.
“They’ll pay more than they would have in October or November but they can get it,” he says, “So, I’m wondering whether things are as bad as the media would have led us to believe. Just because prices got high, does not mean it wasn’t available.”
Funds Long in Corn and Soybeans
According to the latest CFTC Commitment of Traders Report the funds are long in both corn and soybeans and added to those positions in the last week.
In the soybean complex the managed money traders have been long for several weeks.
Gulke says, “It’s very impressive. I would have probably bet they stayed neutral maybe even liquidate a little but it looks like they bought into any kind of weakness.They did a huge, huge amount in new crop corn and corn and beans in general.”
Some in the trade media, according to Gulke, will come out Monday saying when traders get this long they need to get out at some time.“And when he gets out, the doors are not going to be big enough to let him out.”
Gulke disagrees.“The large spec is kind of like a hockey player that wants to shoot the puck or watch where he thinks the puck’s going to go and not where it is. And that’s what they’re looking at.They’re opportunists. They’re buying grain or buying stocks or whatever in anticipation of selling it at a higher price.”
So, the funds can keep defending their market longs longer than you think or in the case of wheat funds were short for nearly four years.
“You have the speculator who bets millions and billions on managing money. They’re still long. If you’re heavily negative agriculture, you probably look over your shoulder and say, what am I missing? We’ll find that out later but usually the large spec is smarter than I am, so I watch him pretty close,” he concludes.
For more information you can contact Jerry and info@gulkegroup.com.
