Funds shed CBOT soy bets but keep corn as supply narratives diverge
Soybean fundamentals have not been particularly friendly to market bulls as of late, but speculators are still not ready to pull the trigger on short bets, as Chicago futures hover near two-month lows.
Investors remain satisfied with a sizable bullish stance in Chicago corn, which has been trading at the second-highest levels for the time of year, just below $7 per bushel.
Traders had been favoring corn futures over soybeans ever since troubles with the U.S. corn crop emerged in August, but that preference escalated on Sept. 30 when the U.S. Department of Agriculture found smaller-than-predicted corn stocks but larger bean ones.
USDA’s next report is due on Wednesday, and analysts expect a smaller corn crop than previously projected while soybeans are seen rising a hair. CBOT November soybeans ended Friday at exactly two times the price of December corn, the date’s smallest ratio since 2011.
In the week ended Oct. 4, which included USDA’s latest report, money managers’ net long in CBOT corn futures and options edged up by nearly 6,000 to 243,728 contracts, nearly identical to a year earlier. Market makeup and open interest are also very similar to 2021, though futures are 29% higher now.
Data from the U.S. Commodity Futures Trading Commission on Friday also showed money managers through Oct. 4 made the largest cut in three months to their net long in CBOT soybeans, which fell to 77,488 futures and options contracts from 94,831 a week earlier.
That compares with a soybean net long near 50,000 contracts a year ago and futures near $12.40 per bushel versus Friday’s settle of $13.67.
Although CBOT soybean futures on Friday ended more than 9% off the month-ago peak, money managers’ gross shorts remain near historic lows and have trended largely flat for the last several months.
Their gross corn shorts numbered near 77,000 contracts in mid-August, still lower than in most years, but those have dwindled to near 28,000 as of last week as risks to corn supply have risen.
Commodity index traders since late June have reduced overall soybean positions by 35%, and those positions are now at five-year lows for the date. But their corn bets have been recently steady and similar to the same dates in the last two years.
Most-active Chicago wheat futures on Sept. 30 hit a three-month high as USDA pegged the U.S. wheat crop well below market expectations on large cuts to area. But futures through Friday ended down 4.5%, their biggest weekly loss since mid-July.
Money managers through Oct. 4 trimmed their net short in CBOT wheat futures and options for a sixth consecutive week, resulting in 12,219 futures and options contracts, somewhat average for the date. Open interest remains safely at 17-year lows for the week. Karen Braun is a market analyst for Reuters. Views expressed above are her own.
Source: Reuters (Editing by Matthew Lewis)