There is simply too much supply in the world to shake speculators from their tremendously bearish view of Chicago-traded grain futures and options, and their hefty short stance still looms over the market.
Combining net positions through Nov. 21 in CBOT corn and wheat, K.C. wheat, and Minneapolis-traded wheat futures and options, money managers hold a short position in grains twice as large as they did one year ago, which had been near record for the time of year.
Despite a one per cent slide in benchmark CBOT March wheat futures over the period, specs barely changed their minds on the soft red winter wheat in the week ended Nov. 21.
According to data from the U.S. Commodity Futures Trading Commission, funds slightly extended bearish bets in Chicago wheat to 108,666 futures and options contracts from 108,576 in the week prior, largely on offsetting additions of both shorts and longs.
This is slightly less pessimistic than funds’ year-ago short stance of 114,222 futures and options contracts.
Wheat futures have hit contract lows in the days since as export data for the U.S. product has disappointed amid stiff global competition, especially from the Black Sea. Over the last three sessions, trade sources suggest that funds have been outright sellers of wheat futures.
In K.C. wheat futures and options, money managers extended their net short to 20,741 contracts from 10,424 in the week prior. The March contract has dropped three per cent over the two sessions, and speculators are likely to shrug off a recent two-point decline in U.S. winter wheat conditions.
Funds increased their net long in Minneapolis wheat futures and options, but hard red spring wheat futures have also experienced notable declines in recent sessions.
Corn futures have been pulled down with wheat, but even apart from the wheat influence, record U.S. corn yields and improving weather forecasts for South American growing regions have stifled any sense of urgency for speculators to ditch their record bearish corn views.
During the week ended Nov. 21, the front-month contract surged two per cent, the largest percentage gain over a five-day period since mid-September.
In that week, money managers cut their bearish bets in CBOT corn to 210,466 futures and options contracts from a record 230,556 in the previous week, although the new stance is still the third-largest fund net short on the yellow grain.
However, total open interest in the corn market fell nearly two per cent over the period – generally a bearish signal if price is rising.
Commodity funds have likely been net sellers of CBOT corn recently, with the heaviest activity on Nov. 27 as benchmark March futures dipped one per cent.
Cautiously bullish views toward the CBOT soy complex have been largely steady for about a month as speculators weigh factors such as uncertainty over the exact size of the U.S. harvest, unfavourably dry weather in Argentina, and improving weather in Brazil as sowing continues in the South American countries.
In the week ended Nov. 21, money managers shaved their net long in CBOT soybeans to 20,144 futures and options contracts from 22,550 in the prior week, though trade sources indicate that funds have been net buyers of the oilseed in the days since.
Speculators may be working toward a bearish position in the CBOT oilshare, which measures soyoil’s share of value in soybean products, and this is a view they have not held since early May.
Through Nov. 21, funds reduced their net long position in CBOT soybean oil to 47,664 futures and options contracts from 56,675 a week earlier. At the same time, the fund long in soybean meal futures and options rose to 15,909 contracts from 6,306.
This cut the oilshare long to 31,755 futures and options contracts from 50,369 in the prior week, but the CBOT oilshare has fallen three per cent in the days since with heavy selling in soyoil and sizable buying in soymeal.