Gulke: Turn Out the Lights

Last week’s column dwelt on the timeline evolution of the government shutdown, preventing data-driven analysts from getting data to analyze. Yet, price chart evolution (technically) showed the way once again with soybeans referenced. The current CFTC reports, finally being released, are putting emphasis on 2025 corn now as well as on new-crop 2026 corn and soybeans and the medium-term outlook.

What I suspected prior was that during the government shutdown, some things might happen behind the scenes that we would not know. I was fine with the absence of data, but I suspect some were caught flat-footed.

Now, as USDA catches up with data, what I feared about China out-negotiating President Donald Trump and out-trading the data-starved traders has apparently come true. Last week’s updated timeline January price chart pointed out the way, and now, with the 2025 soybean crop gone, it was time to put additional emphasis on corn in inventory, as well as on the 2026 corn and soybean crops. The July corn price chart has items of importance in forming an outlook from a technical and fundamental perspective.

Looking back at just one year ago, you will remember that we were in the throes of a “realizing” bull market that few recognized until it topped on Feb. 21. Note that by April 15, the price had returned to exactly the breakdown of the previous uptrend as if to validate that the party was over. The rest is history until late August and the “early harvest low” written about in this column.

Along the way, on July 7, corn gapped down lower as weather affected prices. After posting the harvest low and buy signals similar to Aug/Sept 2024, markets rallied in early September to try to fill the July gap, as the September WASDE report didn’t provide a new bullish catalyst.

In the absence of data, July corn did rally to fill the gap but failed to consistently close above the July 7 gap. My analysis told me decades ago that I wanted to see proof of such a surge by closing two consecutive days above that gap, in this case, to validate. That did not happen, and a “failure” occurred. It was during this time that the China meeting was held with a framework announced, but it added no further bullish bias to corn or soybeans, for that matter. Maybe when details of the deal come out, we’ll know the reason for the retreat in prices. Or perhaps we are the last to know?

That was then, and even a remedial knowledge of price discovery aided in market outlook and opportunities. The event today creates further concern about the medium-term outlook through planting and early July once again.

In the top chart accompanying this week’s column, two points make a straight line, or an uptrend, shown in red. Two points make a trend; three or more are better yet! In the case of July, we had a three-point uptrend; in fact, that was broken on Tuesday, along with the 50-day average. Coincidence? I think not. In fact, one could assume it was the second day in a row, adding more credence to concerns that the party is over. And that is even ahead of the Jan. 10 final update, where the majority of producers believe corn yield has to be reduced — at least that is the hope. For whatever reason, price discovery doesn’t yet believe it as of Tuesday.

Since assuming anything contains the warning that it can make an “ass” out of “u and me,” I’ll manage price risk diligently, knowing that fundamentally, corn demand is hot. But everyone knows that, and a 2.1-billion-bushel carryover caps rallies. So, risk management ahead of Jan. 10 is necessary. By Dec. 28, the USDA and CFTC’s past data will be current, but it appears too late, as the market may be seeing the future.

Whatever one wants to believe, the market gave a warning shot across the bow about a month ago in soybeans and one across the bullish bow of corn on Tuesday.

Like the chart in beans last week, the chart this week shows last year in blue, that the large spec went net long, supporting that uptrend. While the spec has recently decreased his net-short positions, he is nowhere near long yet! We need a bullish catalyst for corn. Perhaps it will come on Jan. 10 or March 31 with a 6-million-acre reduction in planted acres. Capturing some hedge profits on new crops before April will allow pocketing them and then deciding on switches in acres. In fact, the $11 billion subsidy isn’t determined by acres planted in 2026. Perhaps I’ll deposit that check and plant cheaper-input soybeans? If the government won’t question the fertilizer/chemical/seed industries, perhaps just saying “no” will send a message.

Jerry Gulke can be reached at (707) 365-0601 or by email at Jerry@gulkegroup.com