This week, December corn dropped 4 3/4 cents, March corn decreased by 6 5/5 cents, while January soybeans gained 1/2 cent. March soybeans fell by 1 3/4 cents. December soybean meal saw a decline of $7.40, and December bean oil increased by 11 points. December soft red winter wheat fell 1/4 cent, whereas December hard red winter wheat was down 4 cents. December hard red spring wheat also decreased by 1/4 cent.
This week’s Cornrower on Hangover Report
Corn finished the week down by 186 points, reflecting the effects of less favorable yield predictions in the November USDA report, as noted by Jerry Galke, president of Galke Group. He pointed out that corn prices saw a significant drop following the news, and although there was an attempt to bounce back earlier in the week, it ultimately went lower. “The market turned around and closed below the 50-day moving average, and Friday confirmed that again,” he commented.
Looking ahead for the corn market
Gurke is currently analyzing short-term technical indicators to gauge whether the market will continue its decline. “This is the first sell signal for corn since we had the buy signal in October, which was a pretty good rally,” he explained.
Gurke anticipates that the corn market might mirror last year’s trend of low prices at the beginning of the harvest, followed by a strong rally post-harvest. He mentioned that corn reached a low early in the harvest but didn’t go above October’s high, and soybeans haven’t either, even with a rise of $1.40. Due to the abundance of negative forecasts, he’s adopting a defensive stance. “I definitely want to utilize risk management to guard against potential downturns, which involves shorting futures or selling cash, particularly for those still holding grain in storage until July,” he noted.
Soybeans have potential but require caution
This week can be described as a reset for soybeans. January soybean futures peaked at 11.69 1/2 but experienced profit-taking by Friday morning, resulting in a correction of $0.56, hitting a low of 11.13 1/4. After climbing nearly $1.40 from their lows, soybeans appeared overbought and due for a correction.
Gurke observed a hearty rebound in the market following the announcement regarding trade ties with China, noting that the U.S. has committed to purchasing 12 MMT by 2025 and 25 MMT over the following three years. However, clarity is essential for the market to trend upward again. “There’s still some ambiguity over whether we’re considering the calendar year or the marketing year, and whether purchases made at the start of 2025 will count towards that 12 MMT. So far, they’ve secured 1 MMT, which is around 10%,” he said.
He believes the significant reversal may result from short speculators exiting their positions, although without the latest Commitment of Traders report, it’s hard to confirm. Still, he commented, “We left a gap on the chart as the market ascended, breaking through the upper limit of the 18-month trading range. We’re still about $1.00 above that breakout level.” Consequently, even as the market trends upward, Friday’s lows should ideally hold.
Consider selling…
Gurke mentioned that while soybeans have rebounded over $1.40 from their lowest point, some farmers remain hesitant to sell. He expects the trade framework with China might push soybean prices to between $12 and $14. “It’s tricky trying to predict Trump’s next move. He often says we don’t know, but based on past experiences, I think we should consider making some sales.” He concluded, “In times of uncertainty, I find it prudent to sell something.”
Wheat remains lackluster, but is there hidden potential?
Both winter wheat classes ended the week on a low note, with estimated carryout at 7.4 MMT. Concerns over a possible peace resolution between Russia and Ukraine, alongside a strong dollar and forecasts of substantial global supplies, brought down the market during November’s WASDE report.
Although the wheat market has seen several rallies, Gurke noted that it might turn around unexpectedly. “When you’re certain wheat will falter, and you’re convinced most are on the same side, that’s when it reverses. I’ve seen it many times over the years. It could suddenly jump up a dollar, leaving everyone asking how that happened. Then news comes in that turns the market positive,” he shared.
He added that geopolitical tensions in the Black Sea region could alter the landscape swiftly. “If President Trump steps back from Ukraine and Europe is compelled to engage, it’s tough to predict what might happen next. Traders could conclude that wheat is undervalued,” he explained. He insists that farmers should stay prepared for a potential rally that might force speculators to abandon their short positions.
Please contact Jerry for further details. info@gulkegroup.com.
