Column: Funds’ bullish CBOT corn views fall to lowest since Oct. 2020

Source: By Karen Braun, Reuters • Posted: Monday, July 11, 2022

Corn grows in a field outside Wyanet, Illinois

Corn grows in a field outside Wyanet, Illinois, U.S., July 6, 2018. REUTERS/Daniel Acker/File Photo

NAPERVILLE, Ill., July 10 (Reuters) – Chicago corn and soybean futures have undergone a significant downward correction within the last month, fueled largely by signs of an economic slowdown and waning U.S. crop concerns.

Speculators during this time have notably eased their bullish bets, which have stood for more than two years in soybeans and nearly two years in corn. They have yet to firmly plant their feet on the short side of the market, though there was increasing indication of that in the latest week.

In the four-day week ended July 5, money managers slashed their net long position in CBOT corn futures and options to 172,867 contracts from 228,615 a week earlier, and the new stance is their least bullish since Oct. 2020.
Managed money net position in CBOT corn futures and options
Managed money net position in CBOT corn futures and options

They also cut their CBOT soybean net long to 105,048 futures and options contracts, the smallest since January and down from 124,498 a week earlier.

The week’s combined corn and soy selling, equivalent to 376 million bushels, was the most for any week since August 2019, though it ranks only 33rd among other selling weeks since 2010. That is despite 12% and 10% respective dives in corn and soybean futures during the period.

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Money managers increased their gross corn shorts by more than 25,000 contracts through July 5, the most for any week in nearly two years, but this is not yet an established trend and overall shorts remain much lighter than usual. Funds also added nearly 8,000 gross soybean shorts.

Managed money outright short positions in CBOT corn plus soybean futures and options
Managed money outright short positions in CBOT corn plus soybean futures and options

Other reportable speculators marked their fifth consecutive week of notable selling in corn through July 5, slashing their net long by nearly 24,000 on the week to 44,078 futures and options contracts, their least bullish since June 2020.

Index traders trimmed overall corn positions by 2% in the week but raised them by a similar degree in both soybeans and Chicago wheat. Commercial end users have significantly reduced their corn net short since mid-May, when corn futures were on their highs.

As of July 5, commercials’ net short of 158,744 futures and options contracts, the equivalent of 794 million bushels, is their smallest since September 2020. It is also substantially lighter than the May 17 net short equivalent of over 2 billion bushels.

Futures rallied over the last three sessions after once again reaching multi-month lows last week. December corn jumped 7.8%, settling Friday at $6.23-1/2 per bushel. November soybeans ended at $13.96-1/2 Friday to cap off a three-day rise of 6.1%.

WHEAT, SOY PRODUCTS

Trade estimates of fund activity continue missing the mark in Chicago wheat futures, which plunged nearly 14% in the week ended July 5. Commodity funds were pegged to have sold more than 40,000 wheat contracts, though their net futures and options selling was less than 1,100 contracts.

That flipped money managers to a net short of 42 contracts as of July 5, their first bearish stance since March 1. Open interest in Chicago wheat remains at the lowest levels for any time of year since 2009.

Most-active CBOT wheat futures on Wednesday dipped below $8 per bushel for the first time since mid-February, though they bounced more than 10% by Friday, settling at $8.91-1/2.

Through July 5, money managers trimmed their net long in Kansas City wheat futures and options to 22,037 contracts, their least bullish in a year and down from 24,856 a week earlier. They cut almost 3,000 contracts from their Minneapolis long, which fell to 5,131 futures and options contracts, a five-month low.

CBOT soybean oil futures dropped 14% through July 5, and although the selling was smaller than expected, money managers whittled their net long to a two-year low of 24,929 futures and options contracts versus 33,605 in the prior week.

But they bought soybean meal for a third consecutive week, even as CBOT futures fell more than 5%. The managed money net long rose by more than 3,300 contracts through July 5 to 65,777 soyoil futures and options contracts, a two-month high. Open interest rose 1% on the week.

In the last three sessions, soybean meal futures bounced nearly 7% and soybean oil more than 5%, though at different points last week they both hit their lowest levels for most-active contracts since December.

Karen Braun is a market analyst for Reuters. Views expressed above are her own.

Editing by Diane Craft

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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

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