NAPERVILLE — Speculators have sold Chicago corn in 11 of the last 13 weeks after maintaining huge long positions for the better part of two years, and now their bullish bets are just one-third as large as the year’s high.
Last week’s story was very similar to the previous week, where corn futures rose and then fell within the period, but the selling was clearly heavier on the way down than any buying on the way up.
In the week ended July 19, money managers cut nearly 26,000 CBOT corn futures and options contracts off their net long position, which fell to 125,303 contracts, the lowest since September 2020.
Friday’s data from the U.S. Commodity Futures Trading Commission showed that funds’ net selling in corn was almost entirely due to the reduction of gross longs, which has been strong in the latest five weeks. Most-active CBOT corn futures had risen 1.5% in the week.
Other reportable speculators’ net long position in CBOT corn is the smallest since May 2020 at 37,084 futures and options contracts, equivalent to 185 million bushels. Traders in that group expanded their small net short position in CBOT soybeans, which they have held for five weeks now.
Most-active CBOT soybeans rose more than 1% in the week ended July 19, though money managers reduced their net long by nearly 8,000 contracts to 87,832 futures and options contracts, the lightest since December.
Money managers covered a small amount of soybean shorts for a second consecutive week, though exiting longs were the main driver. Gross short positions are still very modest across all U.S. grain and oilseed futures and are similar to last year’s slender levels.
General concerns about the health of the global economy and the recent inflation spike have triggered investors to reduce their exposure in commodities, and prices have dropped off. For corn and soybeans, waffling U.S. weather forecasts have introduced uncertainty, but outlooks late in the week increased expected rain amounts in the coming days across a wide area.
Demand worries are also present as key importer China has been quiet, though there were signs last week of renewed interest as Chinese buyers reportedly secured both Australian and French wheat and a small amount of U.S. soybeans.
Most-active corn futures on Friday traded as low as $5.61-3/4 per bushel, the contract’s lowest level since Nov. 10, and soybeans’ bottom of $12.88-1/2 was their lowest since Dec. 21. Corn and soybeans shed 5.2% and 3.1%, respectively, between Wednesday and Friday.
Chicago wheat futures are more than 40% off their all-time high notched in early March following Russia’s invasion of major grain exporter Ukraine. Grains were pressured late last week amid the signing of a deal to restart Ukrainian grain exports, though the first shipments may be weeks away yet.
Lower open interest and tame trading volumes in CBOT wheat have not recently facilitated large position shifts among investors, who keep slowly drifting further into bear territory.
As of July 19, money managers’ net short in CBOT wheat futures and options stood at 6,816 contracts, barely up from the prior week. They had held a net long of the same magnitude just five weeks earlier.
Money managers sold Kansas City wheat futures and options for a ninth consecutive week through July 19, and the resulting net long of 11,868 contracts is the smallest since April 2021.
Through July 19, money managers’ Minneapolis wheat net long position of 982 futures and options contracts represented just 5% of the record set on April 19. That is funds’ least bullish spring wheat view since October 2020, which is also the last time they were bearish.
All three wheat contracts on Friday hit their lowest levels since February, prior to the Russian invasion. Most-active Chicago wheat tumbled 6.6% in the last three sessions, ending at $7.59 per bushel on Friday. Karen Braun is a market analyst for Reuters. Views expressed above are her own.
(Editing by Matthew Lewis)
Financial Post Top Stories
Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.
By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails. Postmedia Network Inc. | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300