This month, Usda pegged 2024 to 2025 US corn carryout at 1.94 billion bushels versus 2.1 billion in June, far less severe than the 2020 cuts and still representing a five-year high. — Reuters
DESPITE a near-record US corn harvest, speculators have built their most bullish stance in Chicago corn futures and options since February 2023 as US exporters have recently posted some staggering sales volumes. However, the optimism could have a shelf life because supplies remain ample.
In the week ended Nov 12, money managers expanded their net long in Chicago Board of Trade (CBOT) corn futures and options to 109,989 contracts from 22,043 in the previous week. That move included funds’ largest round of short-covering in six months.
The US Department of Agriculture (Usda) on Nov 8 whittled its projection of 2024 to 2025 US corn ending stocks. CBOT corn futures in that session topped at US$4.34-3/4 per bushel, the contract’s highest since June 28.
It is uncommon for speculators to flip from an extremely bearish mid-year corn stance to a reasonably bullish one a few months later since supply uncertainties are usually lower around this time of year. The last comparable situation was in 2020, which like 2024, featured relatively low grain and oilseed prices. But the outlook shift was much more extreme four years ago.
Usda in June 2020 estimated 2020 to 2021 US corn carryout at 3.3 billion bushels, but that forecast plunged to 1.7 billion by November 2020 on a large drop in planted acres. This put the 2020 to 2021 carryout on track for a seven-year low, which ultimately played out.
This month, Usda pegged 2024 to 2025 US corn carryout at 1.94 billion bushels versus 2.1 billion in June, far less severe than the 2020 cuts and still representing a five-year high. The comparison with 2020 suggests the recent bullishness could be short-lived if US demand eases, and a continuation of supportive crop weather in South America would add to the pressure.
It is possible for US export demand to cool. Some market participants believe global buyers stocked up on purchases ahead of a potential, and now certain, second term for President Donald Trump.
US soybean export sales to top customer China are unimpressive, and that could worsen amid any escalation in trade tensions. Speculators have held bearish views toward CBOT soybeans since the beginning of 2024.
Through Nov. 12, money managers ramped up short bets in CBOT soybean meal for a third consecutive week. That boosted their net short to 27,631 futures and options contracts, their most bearish meal view in seven months.
Funds’ sentiment in CBOT soybean oil is quite the opposite, as they increased their net long in the week ended Nov. 12 to 75,144 futures and options contracts. That is their most bullish stance in two years and is on par with their mid-November positioning between 2019 and 2022.
CBOT soymeal futures on Friday hit their lowest levels since June 2020, though a week ago, CBOT soyoil reached seven-month highs. Strong global vegoil prices will continue to be of interest to traders this week, especially following China’s announcement on Friday that it will cut export incentives for feedstocks that compete with U.S. bean oil.
Karen Braun is a market analyst for Reuters. Views expressed here are the writer’s own.
