CHICAGO (Reuters) - After nearly seven weeks as bulls, speculators have turned bearish toward Chicago grain and oilseed futures and options as heavy inventory and largely non-threatening weather for U.S. crops keep the lid on prices. (reut.rs/2gcJeQ7)
Hedge funds and other money managers switched to a net short position in CBOT corn and extended their existing net shorts in CBOT wheat and soybeans in the week ended Aug. 22, according to data from the U.S. Commodity Futures Trading Commission.
Last week, market participants were focused on the Farm Journal Midwest Crop Tour, which scouted corn and soybean fields in the top seven U.S. crop states, and the results were generally seen as bearish.
Advisory service Pro Farmer, a division of Farm Journal Media, projected record U.S. soybean production on Friday partially based on tour results. Pro Farmer also predicted that U.S. corn output would fall short of the U.S. Department of Agriculture’s forecast for 14.153 billion bushels.
But both domestic and global supplies are at comfortable levels, so a U.S. corn crop 8 percent smaller than a year ago is not as bullish as it would be under a tighter scenario.
With increasing confirmation that a reasonably large U.S. corn harvest is on the way, new-crop corn futures kept on setting yearly lows last week, which culminated in a contract low by Friday and continued selling by funds.
Benchmark December wheat also made contract lows in a technical selloff early in the week, but bounced back in the final three days, turning commodity funds into light buyers of the grain.
Sentiment in the soybean market was mixed last week with contrasting items. Strong U.S. export demand, new duties on Argentina biodiesel imports to the United States and lower pod counts on the U.S. crop tour supported new-crop soybean futures.
But the possibility of a record-large U.S. soybean harvest in addition to sizable Chinese cancellations for the U.S. product last Wednesday had speculators on the sell side on both Wednesday and Friday.
In the week ended Aug. 22, money managers upped their outright short bets in corn futures and options by the largest degree since late March. The end result was the death of their 39,802-contract bullish stance on the yellow grain from the week earlier and the establishment of a net short stance of 17,073 contracts.
Similar to the week before, some speculators are still hesitant to abandon the long corn position. For every seven contracts sold last week, only one long was cut.
Funds’ lingering bullishness in the soy complex has finally faded, led by the marked decline of confidence in beans and meal in recent weeks. The soybean meal short was extended for the fifth week in a row to 34,555 contracts from 25,575 the week before.
Money managers modestly dialed up the bearish soybean stance they had established the previous week by about 9,000 futures and options contracts to 23,394 contracts. But interestingly, there were both buyers and sellers through Tuesday. For every four soybean contracts sold, one was bought.
The same thing also happened in the K.C. wheat market, where the net long reduction to 23,770 futures and options contracts from 34,609 was held back by some offsetting purchases. For every three contracts sold, one was bought.
In Chicago wheat, the increase in bearish momentum from the previous week was the largest since mid-March. Through Aug. 22, funds nearly doubled the net short to 66,751 futures and options contracts from 34,236 in the week before.
Movement in speculative views on CBOT soybean oil and Minneapolis wheat was relatively small last week. Funds trimmed their soyoil long to 44,604 contracts from 46,030 in the week before, while they lengthened the Minneapolis wheat long by 565 contracts to 8,724.
(The opinions expressed here are those of the author, a market analyst for Reuters)
Editing by Peter Cooney