For the week December corn was up 12 cents, November soybeans rallied 19 ¼, December soybean meal gained $4.60, December bean oil was up 94 points, December soft red winter wheat was 4 ¼ better, December hard red winter wheat was up 9 ½ and December hard red spring wheat tacked on 4 cents.
December corn was up for the week with most of the gains coming on Friday in reaction to the September WASDE and USDA’s 2.1 bu. per acre yield cut on corn.
However, Jerry Gulke, president of the Gulke Group, says USDA also confirmed record demand at 16.1 billion bu. with a 100 million bu. increase in exports to 2.975 billion bu.
He says the record corn demand estimate struck him as one of the most important parts of the September report as it confirmed the main reason December corn was able to put in an early harvest low on Aug. 12 and was higher on the September report day.
Is Corn Demand Too High?
Many in the marketplace speculate that the 16.1 billion bu. figure is already too high.
They point out that if expected yield cuts continue in corn through the final report in January, UDSA will just offset that by lowering demand.
Gulke disagrees and says USDA had no choice but to raise exports based on the current pace.The 2024-25 marketing year just finished up and sales were nearly 30% above last year.
“We’ve gone from poor exports a couple of years ago, increased them and compounded them, like you compound money in the bank. We’ve gone up about 20% a year, and now in the export sales report, we’re ahead of where we were last year,” he explains.
He says lower prices encourage demand, but the U.S. is price competitive with other exporters in the global marketplace, including Brazil.
End Users Finding Corn a Good Value
It’s not just export customers that are finding good value in U.S. corn at these price levels according to Gulke.
He says ethanol and livestock producers are also buying U.S. corn.
As one cattle feeder told me, “There’s a lot you can do with $4 corn in the world.”
USDA Finally Acknowledging the Strong Corn Demand
Gulke says what’s more important is that the government is starting to acknowledge the strong corn demand.
“They denied it for a while.So now I think they may be trying to get ahead of the curve.Remember last year ending stocks fell nearly 1 billion bu. from the start to the end of the marketing year.So I don’t think they want to miss it again,” he adds.
Trade Seeing a Paradigm Shift
Gulke says global trade is seeing a paradigm shift and how business is going to be done in the world.
“And this is of course, partially to blame or benefit Trump,” he says.
However, he thinks the trade strategy is starting to bear fruit and if the U.S. gets a deal with China the grain market could really benefit.
WASDE Confirms Low in the Corn Market
The bottom line, according to Gulke, is the corn market put in a low on Aug. 12 and built on that in reaction to the September report even in the face of record 16.814 billion bu. crop.
“The market went up.You respect the marketplace and what it does because how the market ends on a report day like this is more important than the report itself,” he explains.
How High Can Corn Prices Run on Strong Demand, If Yield Cuts Continue?
Gulke says so far, he’s watching the July highs for a signal that corn prices will continue to rally.
“We’re not there yet, but if we do that, it’s pretty significant especially when you’re harvesting a really big crop,” he explains.
He’s not sure how high corn prices could go but he says farmers need to be positioned to take advantage of rallies through smart marketing and on-farm storage.
“To me the risk is on the upside,” he says.
For more information contact Jerry at info@gulkegroup.com.
