For the week July corn was down 4 ¾ cents, December was 2 ½ lower, July soybeans were 3 ½ higher, November soybeans gained 13 ½, July soybean meal was up $5.70, July soybean oil regained 161 points, September soft red winter wheat sank 31 ¾, September hard red winter wheat lost 24 ¼, September hard red spring wheat plunged 42 ½.
For the week grain markets were mixed with notable positioning in preparation for two the biggest USDA reports of the year. Many private firms have released their survey estimates on acreage and trade estimates have also been published.
The USDA’s Prospective Plantings Report on March 31 showed farmers intended to plant 95.3 million acres of corn, down 3.45 million acres from last year.Those acres were shifted over to soybeans as farmers indicated they planned to plant 3.5 million acres more soybeans in 2026.
However, with the war in Iran shutting down the Strait of Hormuz and global fertilizer movement prices spiked this spring.As a result, speculation ran high the fertilizer crunch would cause U.S. producers to abandon even more acres of corn and that would show up in the June 30 Acreage Report.
Muted Shift in Acres from Corn to Soybeans
However, private estimates have shown a much more muted shift than once touted with most of the trade guesses indicating only around 200,000 to 400,000 less corn acres and 400,000 to 700,000 more soybean acres verses March.
Jerry Gulke, president of the Gulke Group, Gulke thinks the reason is the uncertainty about acreage decisions this spring. This includes whether or not Southern growers shifted more ground to soybeans and how producers in the West will handle failed wheat acres. “They may replant wheat, take an insurance payment or choose another option, leaving the market to rely largely on guesswork for now.”
Gulke says an additional 2 million soybean acres would likely add roughly 100 million bushels to production, depending on where those acres are located and the yield potential. But if China follows through on expected purchases, he says that extra production may not be enough to pressure the market significantly.
He says in corn, if you raise another million acres, that’s 180 million bushels. That could be detrimental to prices.
“But from where? From May 13th, where we talked about the tops being in. Where we’re at now, we’ve lost a horrendous amount of money. And so can you get bearish at these levels for another million acres? I don’t know if you can or not. And especially this is the end of June and not the end of July. So we’ve still got weather to go through yet.”
Gulke says they were the high end of the prospective planting estimates for corn in March and so the report may not result in the reduction in acres they originally expected.He just hopes the report doesn’t end up showing a two to three million acre increase in soybeans.
“Psychologically, that would hurt the soybean for probably the short term.”
However, he thinks any increase will be quickly absorbed by better demand prospects from record crush and improved new crop exports with 500 million metric tons reported to unknown destinations this week, which is likely the rumored China business.
“So, they’ve proven that they’re probably going to do what they said they were going to do. So, I would expect that the market to look pretty good after the report,” he explains.
He also stresses it is not as much about what the report says, but how the market interprets it.Gulke does not think there is anything in the report that could cause the market to make new lows in either corn or soybeans.
“I hesitate to say that we’ve got the harvest lows in already for corn, but I know last year we posted it in August. I doubt that’s going to happen, but it looks more encouraging.”
Plus, he says all of their technical indicators are turning more positive.“And you’ve got to kind of respect how we closed for the week. We didn’t destroy anything, and we could have at the end of the week for fear of what’s going to happen. So things still look pretty good in my interpretation. We may not go much higher, in corn especially, but we’re likely not going to go much lower,” he adds.
Gulke says there is not a lot of incentive from a price standpoint for farmers to sell any of the grain they have in storage.“If they haven’t sold the corn, or wheat they have in storage by now it isn’t going to get sold. You can’t produce it for that, so why sell it.” He adds.
Quarterly Stocks the Wild Card
The USDA Quarterly Stocks report is still the big question mark according to Gulke, especially for corn.
Demand has been strong for corn but the key will be how much inventory farmers have stored.They did get a good rally to new highs on old crop corn in mid-May, so that may have cleared some grain in storage.
However, Gulke says the market overplays the share of on-farm storage in the report. “I think farmers have proven, with expanded storage capacity and continued government payments when conditions deteriorate, that they are better positioned to hold grain,” he says. “If things don’t go right, another check tends to come, and farmers know that.”
He also believes farmers are better positioned now to hold grain through the summer months. With more storage available, he says they may have an advantage over speculators who are risking paper positions. Speculators have to be right quickly, while farmers can wait with grain in the bin.
Flat Going into the Report
Gulke did not have hedges on going into the report.He lifted hedges a few weeks ago and says he is comfortable riding out the volatility.
“I usually let the market tell me what it’s going to do and it said, get out of the way. Don’t be short anymore. And we weren’t. And so far, so good.”
For more information you can contact Jerry at info@gulkegroup.com.
