Funds all-time record short across CBOT grains, oilseeds

Speculators hit a milestone in the Chicago grains and oilseeds market in late April, as they have reached a new level of bearishness across all seven grains and oilseeds futures and options contracts.

Combining corn, hard and soft red winter wheat, hard red spring wheat, soybeans, soybean oil and soybean meal, hedge funds and other money managers now hold an all-time record net short position of 464,376 futures and options contracts in the week ended April 25, comfortably eclipsing past records.

The most recent week also marks the first ever in which money managers have held bearish views across all seven contracts at the same time. They had come close before for many weeks in mid- and late 2015 into early 2016, but soybean oil spoiled the fun each time.

It is relatively unusual for speculators to be building short positions in grains and oilseeds during this time of year, but as they continue to do so, it just adds fuel to the potential fire should a futures rally come along.

Money managers continued selling CBOT corn futures and options contracts in the week ended April 25, according to data from the U.S. Commodity Futures Trading Commission. They now hold a net short position of 196,257 contracts.

This was likely the most surprising move of the week given that wet, cold, planting-prohibitive weather has been a theme across the U.S. Corn Belt over the past week, and forecasts were calling for this spell to last. Apparently speculators were not at all fazed.

Net shorts were also extended in hard red winter wheat and soft red winter wheat, where funds are at an all-time record short position.

Traders were noting plentiful global supplies, good crop conditions, and benign weather forecasts, and this dragged both HRW wheat and corn futures down with it.

Speculators avoided extending their bearishness over the soy complex last week, slightly retracting their overall short stance, which was led by soybean oil.

Funds bought back just over 10,000 futures and options contracts of the vegoil – the largest buy-back in three months – and are now net short by 37,014 contracts, compared with 47,296 in the previous week.

Money managers have cut enthusiasm for CBOT soybeans for 10 weeks in a row now, but they did so to the least degree this past week. The new stance of 48,275 contracts on the short side is just moderately more bearish than last week’s 45,828.

Record acres in the United States and bumper crops in South America have kept soybean futures at bay, but the belief that the U.S. export market could be supported in the coming months because of the Brazilian farmer’s reluctance to sell soybeans could have curbed the bearish momentum.

Of all seven CBOT grains and oilseeds, soybean meal was the last holdout on the long side of the market, but that changed this week. Funds are now 1,806 contracts short against a 2,639-contract long last week.

About the author

Columnist/Reuters

Karen Braun is a Reuters market analyst based in Chicago. The views in this column are her own.

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