For the week July corn closed 16 higher, December corn was up 15 1/4, July soybeans gained 10 1/4, November soybeans were 15 higher, July soybean meal tacked on $4.30 per short ton, July bean oil was 42-points higher, July hard red winter wheat was up 22 ¼, July soft red winter wheat gained 17 1/2, July Minneapolis surged 33 ¼.
The grain markets all ended higher for the week leaving some positive chart signals but what does the action mean?
After turning bearish last week, Jerry Gulke, president of the Gulke Group, says he watched the markets all rally without a real fundamental reason for the move.
“So, it’s a little confusing,” he admits, “but that’s what the market does.”
Conversely the previous week Gulke did not see a sound reason for corn to move to such low price levels, especially with exports running nearly 28% ahead of a year ago and old crop ending stocks at only 1.415 billion bu.
Gulke pointed out, “With the tight stocks we should see better prices in corn, but it didn’t seem to make any difference.”
However, the corn market reversed and went higher on Monday and Tuesday following wheat, which had hit five year lows.
Gulke speculates it may have just been funds covering short positions after the wheat markets made new contract lows and old crop corn made new lows for 2025.
“Because we can’t find a new fundamental reason either in tariffs or anything else and we haven’t had a weather market. In fact, we got good rain in key places. So, was it the speculator that just said I’m going to cover, and in wheat as well? You could say all right that makes some sense because who wants to sell it here this early in the year?”
According to Gulke, soybeans have been the most resilient market in the face of a record South American crop and a trade war with China.
He points out, “A lot of people three or four months ago said, boy, if that crop in Brazil comes true, we could see $9 soybeans. Well, the crop got bigger and we’re not at $9. No, we’re not even at $10. So, something’s going on that makes one suspect of what’s really happening, do the fundamentals really matter?”
Gulke thinks the grain markets may have carved out some wide trading ranges and are just moving sideways due to the uncertainty tied to tariff and trade policy, biofuels policy and even weather.
So, does he trust the rally, and should producers be doing any marketing as a result?
“Well, I think you hold in here until something concrete happens. This week we bounced off of new 2025 lows in corn and wheat. If we hold that level and add on to it after the long weekend or when we start to develop uptrend lines, then we have to think there’s something happening here and you sell some,” he explains.
To sustain the rally Gulke thinks the market need to see buying by countries like Japan or India or new trade deals.
“The market needs to see some developments soon or it will get tired,” he adds.
The other catalyst for a continued rally in the grains is, of course, weather.
“On average, the crops look pretty good. I mean, the Northern Plains and North Dakota, got one to four inches of rain, they could use more because it was dry. But yet there was some crusting in early planted field that had to be replanted and Ohio and Southern Illinois are behind because they’re too wet,” he says.
Gulke says with the calendar closing in on June producers need to respect weather, as well as long term forecasts calling for hot and dry conditions to return to the Western Corn Belt in July and August.
For more information contact Jerry at info@gulkegroup.com.
