Gulke: ABCs of Market Outlook

Markets have reacted according to the expectations of some and to the surprise of others. I happen to be in the former camp, expecting the first quarter of 2026 to be supportive and to carry on with the trends that started extending in early January.

The change in trend basically started in August 2024, when a paradigm shift in global ag trade was in the works. Market signals forecast changes were in the works. How those changes would occur was unknown then, but “price discovery” sensed it. Evolution since then has resulted in the fundamentals that now justify technical signals that foreshadow things to come.

During the last 18 months, some bullet points have surfaced that are worth noting if we are to learn anything at all about price discovery and market outlook. The letters in the points below refer to points on the chart accompanying this column.

— First, the period from 2006 through 2012 started with a pseudo acreage battle as a result of ethanol entering the picture, which favored corn.  Subsequently, soybeans reached $17, cumulating in a drought-induced supply-driven market, opening up Brazilian acreage. Anyone anywhere can make money on $17 soybeans. The uptrend stopped, and soybeans spent six years building new demand.

— Years 2021 through 2022 created another supply-driven bull market, ending again at the 2012 $17 high and more years of Brazilian expansion. Interestingly, however, is that it took nearly seven months of testing $17 for the top to occur (A on the chart). This brings us to the last four years. Note the items marked in red!

— The severe downtrend started in earnest in 2023, as prices reflected continued surpluses, and rally attempts to $17 failed, indicating the supply job was sufficient. That ensuing collapse (dotted red line) ended in 2024.

— A paradigm shift occurred in August 2024 (B), referenced many times in this column, with soybeans spending 12 months again building demand.

— It wasn’t until point (C) that buy signals evolved, turning the short-, medium- and long-term outlook friendly.

— This brings us to point (D) and the potential testing of the long-term solid red downtrend line. It is decision time.

— Will the long-term four-year downtrend hold and put a stop to the recent uptrend that is progressing in earnest in Q1 2026 or NOT?

— Not shown on the chart are long-term technical sell signals at point B, and the bottoming and subsequent buy signals monthly at point C that have helped keep a focus in the soybean, soy oil and canola feedstocks, and the recent surprise in wheat, as well.

Bull markets are always difficult to handle, as media analysts are often in disbelief and want to buy a put and put a floor under a market that is obviously surprising to them. Just today, I heard in the media comments about the market being confusing, unconventional and a comment that, “I just don’t know or understand the strength,” adding to what the market does best — that is, to act like a futures market looking ahead, not backward.

The paradigm shift in ag is now 18 months old, and for market bears, there may be financial pain for some firms before the top is in. The point D on the chart says there is a day of reckoning coming that may coincide with the bears turning bullish as they run out of margin money. As a clue, listen for the majority to get bullish. May we live in interesting times.

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If the last 18 months have left you confused and needing more information on understanding markets and our price-discovery system, our March 30-31 Commodity Outlook Conference could help. Click info@gulkegroup.com for more information, or call Jamie at 707-365-0601 to reserve a space.

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