- Reuters
SPECULATORS peculators last month turned optimistic toward Chicago-traded corn for the first time in more than a year as US exporters were posting jaw-dropping sales volumes.
In fact, US corn demand has been so good that it forced the US Department of Agriculture last Tuesday to slash its US corn carryout estimate by 10%. That was well below analyst expectations and below year-ago levels, too.
In the week ended last Tuesday, Dec 10, money managers expanded their net long position in Chicago Board of Trade (CBOT) corn futures and options to 165,890 contracts from 88,220 a week earlier. The new stance is their most bullish since February 2023.
That move included the addition of more than 53,000 gross long positions, the most for any week since November 2021.
Most-active CBOT corn futures rose nearly 4% lastweek before notching a six-month high last Wednesday of US$4.51-1/4 per bushel.
Money managers’ bullish corn views perhaps make sense given that 2024 to 2025 US corn carryout ideas have tumbled more than 30% since the start of this year. But they stick out relative to funds’ bearish wheat and soybean takes.
Whenever speculators are sufficiently net long in CBOT corn, they also tend to hold net longs in CBOT wheat and soybeans, or at least in the combination of the two.
As of Dec 10, money managers’ net shorts in wheat and soybeans combined to 125,099 futures and options contracts.
This anomalous spread between funds’ corn views and their wheat and soybean views could imply that one or more of these positions are out of bounds and due for a correction.
When it comes to funds’ bullish corn and bearish soy positions, the recent setup most closely resembles that from June and July 2019.
Wet weather caused extreme delays in both US corn and soybean planting that year, but only corn futures posted notable gains as US soybean stocks were flirting with one billion bushels.
US soybean stocks in 2024 to 2025 are not expected to be anywhere near that burdensome, but they are seen up nearly 40% on the year.
Money managers in the week ended Dec 10 cut their net short position in CBOT soybean futures and options to 58,320 contracts from 72,217 a week earlier, predominantly on short covering.
That is their most bearish soy view for the time of year since 2019.
They also pared their net short in CBOT wheat to 66,779 futures and options contracts from 69,386 a week earlier.
Most-active wheat had climbed 2.6% that week.
Money managers through Dec 10 held their net short in CBOT soybean meal at near-record levels, trimming it very slightly to 72,427 futures and options contracts.
They also boosted their net long in CBOT soybean oil by about 8,000 to 17,519 contracts after three weeks of active selling.
Corn futures fell 1.6% over the last three sessions while wheat dropped 1.7% and meal recorded 2% losses.
Soybeans and soy oil declined fractionally, though traders will be waiting to see if heavier US soybean sales at the end of last week carry into this one. —- Reuters
Karen Braun is a market analyst for Reuters. The views expressed here are the writer’s own.
