Corn and wheat markets posted lower weekly and monthly closes, with July corn down 16 ½ cents and December corn falling 11 ½ cents for the week ending May 29. Jerry Gulke, president of the Gulke Group, said the lower monthly close in corn is significant because the market failed to close above its April high.
“We failed miserably, actually, because May is over with and from the high on May 13 to the low today, we’re now 33 cents per bushel lower,” Gulke said. He attributed this decline to reactions following the China summit outcome and disappointment with a White House fact sheet that indicated gaps in the trade framework. “When the market participants initially saw the $17 billion of U.S. agricultural purchases by China over the next three years, they thought it was a big deal. Some even got out of their hedge positions and went long only to find out it wasn’t even as good as the Phase One deal,” he said.
As for how low corn prices might fall after losing 33 cents per bushel from May highs, Gulke said, “Quite frankly, I don’t know. You know, there’s some chart points on there that you can look at. But when I look at a chart point, I say, what made that low? And I think today we need to really take a look at this.” He also noted that end-of-month repositioning may have exaggerated recent moves in corn futures.
Gulke pointed out growing carry in the corn market; March 2027 corn was trading at a premium of 48 cents above July contracts on Friday. He advised farmers still storing old crop corn not to buy it back or rehedge into March contracts given current sales challenges: “If we can’t sell more corn to China at today’s rates, what makes us think we’re going to sell it at a higher price for December and then March at $.48 a bushel higher?”
The pressure in corn was confirmed by Friday’s CFTC Commitment of Traders report showing managed money traders were liquidating long positions as of last Tuesday. Still, Gulke said funds remain net long new crop contracts: “I think in new crop corn, they’re long something like 330,000 contracts. That’s huge…they didn’t liquidate completely.”
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