Funds boost confidence in CBOT soyoil amid global vegoil strength
Speculators last week staged their biggest Chicago soybean oil buying spree in just over a year, lifting their bullish soyoil bets past their soymeal ones for the first time since June.
Through Friday, CBOT soybean oil futures BOv1 had risen 16% this month and Malaysian palm oil futures FCPOc3 was up 20% as global vegetable oil supply concerns persist.
In the week ended Oct. 18, CBOT soyoil rose 5% and money managers added nearly 14,000 futures and options contracts to their net long position, according to data from the U.S. Commodity Futures Trading Commission.
That net long reached 74,974 futures and options contracts, the largest since May and above funds’ soybean meal net long of 70,797 contracts, a slight gain on the week. Money managers have been bullish oil relative to meal for two-thirds of the last two years.
Both soyoil and soymeal futures notched 4% gains in the last three sessions, lifting soyoil above 70 cents per pound. However, open interest is lagging past years as of Oct. 18 with soyoil at eight-year lows for the week and soymeal at nine-year lows.
The 2022 U.S. corn and soybean harvests have fallen short of initial expectations by a combined 800 million bushels (5%), keeping speculators on the long side of those markets into a third straight year.
Open interest in corn futures and options is 1% heavier than a year ago and for soybeans it is down 12%, though open interest is significantly lighter than the same date in 2020, particularly for soybeans. Gross shorts remain near minimum levels.
The week ended Oct. 18 contained the Oct. 12 U.S. Department of Agriculture report, which was friendly for soybean bulls but neutral to negative for corn. Money managers in that period reduced their net long in CBOT corn futures and options by about 13,000 to 254,261 contracts.
Funds’ net long in corn is larger than in the same weeks in 2021 and 2020, both of which were around 220,000 contracts.
Money managers through Oct. 18 snapped a four-week selling streak in CBOT soybean futures and options, adding just over 1,000 contracts to their net long, which reached 66,862 contracts. That position dipped below 20,000 contracts in the same week a year ago, but the comparable 2020 net long of about 232,000 contracts was near the top of funds’ latest bullish run.
CBOT wheat futures Wv1 dropped nearly 6% in the week ended Oct. 18 following a more than three-month peak, though low open interest continues to limit fund moves. Money managers cut nearly 2,600 contracts from their CBOT wheat net short, which fell to 22,051 futures and options contracts. Selling had been estimated at over 16,000 futures contracts.
CBOT wheat flirted with one-month lows Friday, as the trade’s sentiment toward the Black Sea grain deal flips between hot and cold. Ukraine’s president on Friday accused Russia of intentionally holding up 150 Ukrainian grain vessels, and Moscow appears hesitant in extending the grain deal next month as Russian desires are not being met.
On the supply side, wheat sowing pace in Ukraine and Russia have been below normal, and U.S. farmers are planting their wheat in historically dry soils. In the Southern Hemisphere, drought has hammered Argentina’s crop and heavy rains are raising quality concerns in Australia.
Source: Reuters (Editing by Robert Birsel)