For the week, December corn was 1¢ higher. November soybeans were 44¢ lower, with December soybean meal $5.40 per short ton lower and December soybean oil down 253 points. Chicago December wheat was 24¾¢ lower, Kansas City wheat was down 35¼¢ and Minneapolis wheat lost nearly 20¢.
Corn
December corn also made new contract lows early in the week, so the fact it closed higher was somewhat of a victory. Jerry Gulke, president of the Gulke Group, says it’s rare for September to expire and December to take over as the spot month at 18¢ above September’s close.
“On a weekly continuation chart, $4.60 was the low and we’ve held that I guess to buy time and price in information about the crop, as good as we can, or in October, will it be a little bit less,” Gulke notes, adding the bull market started at $4.60. “I guess I call it the scene of the crime when we broke out to the upside above $4.60, which was a couple years ago, and then we had the war and droughts. We’ve reset, as the Fed chairman would say, that economic indicator in corn all the way down to starting all over again.”
So, has the corn market completed its reset? Is this the new plateau for the corn market, or is this a paradigm shift? Gulke thinks it very well might be because the most negative news is already factored into the market.
“The market is turning stronger right now, so it’s almost saying we stopped at a point where we have to hold,” he explains.
Gulke says he will change his mind if the corn market takes out the September lows due to harvest pressure.
Wheat
The wheat market was the first to reset and take out the war and weather premium that pushed prices to new highs in the spring of 2022.
“We reset everything as if all things are normal, even though they aren’t,” Gulke says.
Even though U.S. wheat prices aren’t globally competitive, he cautions that global stocks are falling.
Gulke is concerned we might be lulling ourselves asleep, ignoring that global stocks are becoming less and we’re not able to compete in local markets with exports in the short term.
Wheat can often rally well before the fundamental reason becomes apparent, which is where technical analysis comes in – and the bears are watching.
Soybeans
Soybeans have also been resetting, according to Gulke, and steadily grinding lower the past 18 months. However, he believes there is a good news—bad news story for the market. The bad news is South American competition.
“The United States has been facing the headwind of South America’s record production and exports,” he says. As a result, USDA lowered soybean exports in the latest WASDE down to 1.78 billion bushels, considerably less than the past two years.
The good news, he says, is USDA is still projecting carryout at only 220 million bushels.
“I thought it was kind of encouraging to see USDA put together a global supply and demand that says we’re going to produce a lot in South America, they’re going to have us for lunch and we’re going to lower our exports,” Gulke says. “But yet we don’t have 300 or 400 million bushels leftover yet.”
The rest of the story is yet to be told in the October WASDE with yield and demand adjustments. However, Gulke says if South America has any crop problems in the season ahead it could make the U.S. carryover extremely tight.
.
