Gulke: The Day of Reckoning
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The corn and wheat futures charts show the red 50-day and blue 100-day moving averages, as well as the net long/short position and the trend direction of the large speculator. (Charts by Gulke Group)
There is little left to say or warn about that hasn’t been said before in this column. It’s great to see a plan come together, so let’s review. As a backdrop, I would be remiss if I didn’t mention the paradigm shift that started in late August 2024. To recall, September soybeans, corn and Chicago wheat futures were trading at $9.40, $3.60 and $4.93, respectively. Wednesday’s closing prices were $12.32, $4.61 and $7.08, respectively. Do the math: Regardless of which acres you plug in, gross income per acre is up significantly. What we saw two years ago began evolving before the political situation we now find ourselves in — and here we are.
As is so often the case, once the ship — in this case, the price recovery — has sailed, media analysts come up with obvious fundamental rationale for what happened, not what will happen. It can often feed on itself, but once the majority of media voices turn bullish, the tops are at hand or already happening. That is how it works — this is a “futures” market, not a “past” market. Looking backward to predict the future may generate brokerage commissions, but it will often leave money on the table.
Two charts — corn and wheat — accompanying this column tell the story and bring reality into perspective. Soybeans have been the focus in this column. The charts show the red 50-day and blue 100-day moving averages, as well as the net long/short position and the trend direction of the large speculator. If nothing has been learned from the past seven months of price discovery, here are a few bullet points to refresh your memory.
— The markets topped nearly exactly on May 13, not Feb. 21, as most podcasts suggested in a repeat of a prior pattern.
— The collapse came on the release of the fact sheet from the Xi-Trump summit, which was a psychological disappointment for the advisers who were long and wrong.
— June 30 marked the low for corn, soybeans and wheat, in keeping with technical signals that I used to lift hedges on all three commodities and purchase August call options in anticipation of a rally.
— As of Wednesday, wheat and soybeans have not only exceeded their June highs but are posting new highs for 2026, and corn is close. If you know anything about price discovery, that does not appear bearish.
— The market volatility from Jan. 15 to May 13 to June 30 and back to Wednesday represents about a $2 million swing for a 5,000-acre Illinois farmer. How much of that opportunity did you capture?
As I said, it is nice to see a plan come together. Now we watch what all those who were negative on ag will do. I think of the accumulator plans that Cargill was so famous for years ago — I wonder how those are working out now. Or consider the constant calls I fielded from my local elevator in northern Illinois about being prepared to sell — we were told we faced a big South American corn and bean crop, no threatening weather and political unrest, not to mention the notion that China would never follow through on buying that 25 million metric tons.
Broker-analysts who were negative on ag the last seven months — or had no clue what was happening in price discovery — will come around now that weekly price action has turned positive. A case in point: confirmation that upward of 100,000 corn call options were purchased Wednesday in a block trade. They are 22 days late, but as I said, they are beginning to get religion.
Keep your eyes and ears open for signs of the majority turning bullish — including your broker, if he starts to advise exiting poor hedges. The large speculator will already have had positions in advance of tops; someone will offer you free deferred payment at harvest or some scheme to part you from ownership. And your elevator buyer will probably start to widen your basis. Send him a copy of this column as an answer.
For me, I will use the same methodology in the weeks ahead to navigate these waters. If your broker has led you astray, stood frozen like a deer in the headlights or simply has no clue what price discovery is all about — nor the art of making a deal — contact me at Jerry@gulkegroup.com, and we’ll talk.
Jerry Gulke can be reached at (707) 365-0601 or by email at Jerry@gulkegroup.com
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