October 25, 2017 / 2:44 AM / a year ago

Column: Funds favor CBOT soy over corn to largest degree in 13 months - Braun

CHICAGO (Reuters) - Speculative views toward Chicago-traded oilseeds versus grains have reached the largest disparity since January, favoring oilseeds - which include soybeans and their products. (reut.rs/2xZz8dt)

A lone corn stalk is seen in a soybean field on a farm in Coatsville, Maryland August 30, 2013. REUTERS/Gary Cameron

At the center of this is soybeans and corn, where the same spread has reached a 13-month high in the week ended Oct. 17, according to data from the U.S. Commodity Futures Trading Commission.

Strong global demand for soybeans and the notion that the U.S. soy harvest may not reach as large a volume as previously suspected have been holding speculators’ interest in the oilseed as of late.

Funds sold soybeans on Friday as favorable weather last week helped U.S. farmers make considerable strides in the lagging harvest, but many market-watchers believe the U.S. Department of Agriculture could reduce yields even further in its update next month.

While the U.S. corn harvest has also been slower than usual, the results are certainly better than industry analysts had predicted and field reports continue to confirm the strong performance.

This adds further pressure on CBOT corn futures amid ample global supplies, and the benchmark December contract marked its lowest-ever close last Friday at $3.44-1/2 a bushel.

However, the funds’ large short position in corn is likely to spur some short-covering in the near future, and this may be evident in Monday’s session as the December contract was up close to 2 percent late in trading.


Money managers extended bearish bets in CBOT corn futures and options to 170,684 contracts from 162,937 in the previous week. (reut.rs/2xZ8NMv)

This is the most pessimistic stance ever on the yellow grain by commodity funds in mid-October and is also their most bearish stance since late May. With the late-week selling, speculators likely opened trade on Monday with an even more bearish view on corn.

As a reminder, the all-time record for CBOT corn bearishness was set in the week ended March 8, 2016, at 229,176 futures and options contracts.

On the contrary, funds stepped up their optimism on CBOT soybeans, marking the largest weekly boost in confidence since early July. (reut.rs/2y08SPX)

Money managers increased their soybean net long to 68,168 futures and options contracts from 30,992 in the prior week, which is the most bullish position that speculators have taken on the oilseed since mid-March.

Fund activity in the days since does not suggest that the spec soybean stance has drastically shifted since Oct. 17.


Money managers continued to chip away at their net long position in the CBOT oilshare, which measures soyoil’s share of value in soybean products, mostly through ongoing short-covering in soybean meal futures and options. (reut.rs/2y1pfvA)

In the week ended Oct. 17, funds extended bullish bets in soybean meal to 21,127 futures and options contracts from 13,055 a week prior. This is the greatest optimism in soymeal shown by speculators since March, after which the fund stance took a dive to record levels of bearishness midway through this year.

The spec sell-off in soybean oil was halted last week after the month began with a record plunge in optimism on the vegoil. Funds slightly lengthened their net long to 24,925 CBOT soyoil futures and options contracts from 23,132 in the previous week.

The speculative moves in the soy products last week trimmed the oilshare net long to 3,798 futures and options contracts from 10,077 a week earlier. Money managers have not held a bearish oilshare view since early May.


The most notable speculative move in wheat futures and options last week was that the funds took on a bearish stance in K.C. wheat for the first time since late April. As of Oct. 17, the net short position totaled 4,662 contracts versus the 843-contract long in the prior week. (reut.rs/2y09hSt)

In Chicago wheat, money managers extended their very bearish stance to 77,692 futures and options contracts from 67,729 in the week before.

Funds continue to slowly shed their net long in Minneapolis wheat futures and options, trimming their bullish view to 4,651 contracts from 5,206 in the previous week.

Trade sources indicated that funds were largely net sellers in the wheat market toward the end of last week, though benchmark Chicago December futures were up nearly 3 percent late in Monday’s trading.

Editing by Matthew Lewis

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