Funds maintain long CBOT corn, soy bets leading in to U.S. harvest
Speculators only lightly trimmed their bullish Chicago corn and soybean bets last week despite a larger U.S. crop outlook from the government, though the harvest season can be a seasonally weak time for futures, especially in years when a decent crop is expected.
U.S. corn and soy supplies are still predicted to be much tighter than usual over the next year, but healthy export predictions might be too aggressive given storm damage to export terminals and solid crop expectations out of competitor suppliers.
In the week ended Sept. 14, money managers reduced their net long in CBOT corn futures and options by nearly 3,000 contracts to 212,229 contracts based on data from the U.S. Commodity Futures Trading Commission.
They also reduced their net long in soybean futures and options to 55,380 contracts from 57,516 a week earlier, and the new stance is funds’ least optimistic since August 2020.
The latest week is the fourth consecutive one in which funds shed gross longs in both corn and soybeans, but they also covered shorts last week. Other reportable speculators are nearly flat in soybeans after being near-record bullish at the start of this year, though they are still modestly long corn.
The U.S. Department of Agriculture’s Sept. 10 increases of the domestic corn and soybean crops were relatively close to the average analyst guess, though many traders feared the outlooks could come in much heavier than expected.
Most-active corn and soybean futures both hit multi-month lows on that date, though they have drifted higher since. Between Wednesday and Friday, corn Cv1 added 1.3% and soybeans Sv1 were nearly unchanged.
The 2021-22 U.S. corn and soybean export season that began on Sept. 1 is not off to a good start following hurricane damage to key Gulf export terminals late last month. Shipments have been very slow and export sales, particularly those for corn, have been poor versus normal levels.
Top soybean buyer China continues to purchase small volumes of U.S. soybeans multiple times per week. But last week’s unusual purchase of more expensive Brazilian soybeans for shipment in October seems to reflect China’s concern about the reliability of U.S. exports.
Leading soybean exporter Brazil has just begun planting what is predicted to be a record soybean crop, potentially squeezing out some U.S. exports upon harvest early next year. But traders are watching dry conditions, which have delayed Brazil’s soybean planting in the past, including last year.
Money managers continued selling soybean oil futures and options through Sept. 14, reducing their net long to 47,094 contracts. That is their least bullish view since July 2020 and down about 6,000 contracts from the prior week. They have not maintained a solidly bearish stance for over two years.
For the date, most-active soybean oil futures BOv1 are trading at about the same level as in 2012 but much higher than in any other year since then. Friday’s settle of 56.26 cents per pound is 24% off the all-time high set in early June.
In the first week of September, funds established a bearish view in soybean meal for the first time in just over a year, and they extended that net short to 16,332 futures and options contracts through Sept. 14 from 7,762 in the previous week.
Most-active soymeal futures SMv1 on Sept. 9 hit the lowest point since Sept. 30, 2020, the latter of which was early in the latest grain and oilseed rally. They have edged a little higher since then, finishing at $342.20 per short ton on Friday.
Through Sept. 14, money managers flipped to a net short position in Chicago wheat futures and options for the first time in two months. The position is small at 6,005 contracts versus the net long of 5,167 contracts a week earlier, and the move was based almost entirely on the exit of longs.
Global wheat stockpiles are plentiful, but uncertainty remains about exportable supplies in top countries like Russia. Consultancy IKAR last week announced a production estimate up to 3 million tonnes below its previous outlook and around 13% smaller than a year ago.
Russian farmers are seen sowing less winter wheat this fall than a year ago based on dry conditions, variable export taxes and competition with other crops. Canada’s 2021 wheat harvest estimates also continue to shrink, and the smallest spring wheat crop since 2007 is now expected.
Money managers were sellers of both Minneapolis and Kansas City wheat futures and options through the week ended Sept. 14. They reduced their Minneapolis net long to 12,930 futures and options contracts from 15,647 a week earlier, the biggest spring wheat selloff since June.
Funds cut their K.C. long by nearly 3,600 futures and options contracts to 37,646. They have not been bearish hard red winter wheat since August 2020.
All three wheat contracts rose more than 1% over the last three sessions. Most-active CBOT wheat Wv1 on Friday finished at $7.08-3/4 per bushel, about 3% off the month’s high and 5% above the low.
Source: Reuters (Reporting by Karen Braun; Editing by Matthew Lewis)