For the week December corn was up 8 ¼ cents, January soybeans soared 55, December soybean meal was $27.50 higher, December bean oil lost 159 points, December hard red winter wheat gained 23, December soft red winter wheat was up 21 1/2, December hard red spring wheat was down 7.
Soybean Surge on China Deal
January soybeans had a higher weekly close and chart breakout hitting levels not seen in 13 months. It came on the heels of this week’s trade framework between the U.S. and China which lowered tariffs and included ag purchases.
Jerry Gulke, president of the Gulke Group, says the reaction in the soybean market following the meeting between President Trump and Chinese President Xi in South Korea created a volatile reaction in the soybean market.
The meeting between the two leaders wrapped up overnight Wednesday and both left without any press briefing. So, he says shortly after that the market was down $.20, with wheat and corn also sharply lower. “It looked like the market was disappointed that President Trump got on a plane back to the states and there was no news. So, the market speculated that no deal had been reached,” he explains.
However by around 6:30 am Thursday the soybean market rallied sharply as Treasury Secretary Scott Bessent appeared on Fox Business News and broke the story that the U.S. and China had agreed on a trade framework that included commitments to buy 12 MMT of U.S. soybeans in 2025 and 25 MMT annually through 2028.
Market Reaction Technically Significant
Gulke says the market reaction was technically significant because during the course of the $.56 trading range in soybeans Wednesday night into Thursday the market tested the bottom side of the range and a long-term gap area, and it held.
Gulke says the market won’t go down and fill that chart gap. “If this market is any good at all and China is going to buy soybeans into January then you should ever go back down and test that area again. You tested it the night of the meeting and that was sufficient,” he says.
After Bessent provided details of the framework the market quickly reversed higher with soybeans testing the high of October 2024 according to Gulke. “So, if you look at October of 2024, the market discovered a price based on the fundamentals. At that time no one thought China wasn’t going to buy any soybeans in the fall of 2025 and that left a void. So, now we filled that void with 10 to 12 million metric tons. We’ve gone back to normal, and we went right back up to that chart level again,” he explains.
Soybeans Have Chart Breakout Friday
Gulke says the market built on that chart strength into Friday and closed above the October high. “On Friday we did close above the level, but for months, if you recall, we talked about how important it was, to me, at least, that we closed above that harvest high,” he adds.
With the China deal as the catalyst the soybean market has now accomplished that technical objective and made new highs for the move. So, he says it will probably move a lot higher.
WASDE November 14 Could Confirm Tighter Soybean Balance Sheet
USDA announced on Friday it will be releasing a WASDE on November 14. Gulke says that report will be important for the market to see how USDA incorporates the renewed China business but he expects it will confirm the tighter balance sheet for soybeans because of stronger demand and lower yield. which could also be price supportive.
“I think it’ll offer some opportunities for producers so just be prepared. If you’re holding a lot of grain in on farm storage you are long the market. If you haven’t priced any soybeans watch the price of options because they are probably going to get pretty volatile now, but there should be opportunities to cover yourself either way. Not having a plan is not a plan,” he says.
For more information contact Jerry at info@gulkegroup.com.
