April 3, 2018 / 1:06 AM / 4 months ago

Funds burned by bullish planting data after corn sell-off

CHICAGO (Reuters) - Chicago-traded corn and soybean futures shot through the roof last Thursday after government data suggested that U.S. farmers intended to plant far fewer acres this spring than the market had expected.

But instead of basking in victory, many commodity funds were left with some serious seller’s remorse in the case of corn, which they had dumped just days earlier.

The U.S. Department of Agriculture shocked market participants on Thursday by pegging U.S. corn and soybean plantings well below trade expectations, and CBOT futures responded in a big way.

The intraday range on March 29 of 38.25 cents per bushel in most-active soybean futures was the largest since Oct. 12. New-crop November futures hit life-of-contract highs and notched their highest-ever settle price of $10.47-3/4 a bushel.

Most-active corn futures surged 3.8 percent on Thursday, the contract’s largest daily percentage gain since July 3, 2017.

But in the week ended March 27, hedge funds and other money managers drastically reduced bullish bets in CBOT corn to 116,911 futures and options contracts from 213,231 in the prior week, according to data from the U.S. Commodity Futures Trading Commission.

Some 40 percent of this move stemmed from new outright short positions, and this detail may have particularly stung since it was funds’ largest weekly add of corn shorts in nearly seven months. Funds’ positioning when the report landed was a likely factor in the futures surge. (reut.rs/2J4ixHc)

Speculators had cut back their bullish soybean stance prior to the report, though it did not have them as off-guard as they were in corn since the reduction was much less significant.

Money managers trimmed their net long in CBOT soybean futures and options to 183,578 contracts through March 27 from 195,522 in the prior week. The reduction in outright long positions produced nearly this entire move. (reut.rs/2uAw1as)

Saying that funds have bought corn and soybeans in the two sessions since March 27 may be putting it too lightly. Wednesday featured some modest selling, but Thursday’s activity was nothing short of impressive.

Trade estimates suggest that commodity funds bought 43,000 corn contracts on Thursday, which is the largest-ever daily estimate collected by Reuters in records dating back to March 2011. The estimates also render Thursday as one of the top soybean buying days in the last seven years with 25,000 contracts, the largest estimate since May 10, 2016.

OILSHARE RECORD

Speculators’ stance on the CBOT oilshare, which measures soyoil’s share of value in the soy products, reached new levels of bearishness in the week ended March 27 with selling in soybean oil and buying in soybean meal.

Their new net short in the oilshare of 138,189 futures and options contracts topped the old record of 132,670 set just two weeks earlier. (reut.rs/2pSOGsE)

The buying in soybean meal was light, but funds’ net long of 102,073 futures and options contracts represents one of their most bullish meal positions of all time. They had held a net long of 99,478 meal contracts in the prior week.

Money managers still hold pessimistic views of soybean oil, however, as they extended their net short to 36,116 futures and options contracts from 24,920 a week earlier. The new stance is funds’ most bearish in the vegoil since last April.

Commodity funds have dialed back their soyoil short in the days since as trade sources indicate they were straight buyers on Wednesday and Thursday. They were net buyers of soymeal during the same period, but Thursday’s buying was significantly heavier than Wednesday’s selling.

WHEAT BUZZKILL

The overall mood in the wheat trade was mostly negative in the week ended March 27. Money managers still hold a bullish view on K.C. wheat futures and options, but they trimmed it to 26,881 contracts from 29,586 in the prior week.

Funds’ extension of bearish bets in CBOT wheat was much more sizable. As of March 27 their net short was 77,752 futures and options contracts strong, up from 56,107 in the previous week, and that was mostly through the establishment of new outright short positions.

Trade sources suggest that commodity funds were net buyers in CBOT wheat on Wednesday and Thursday, and this may have also been true for K.C. wheat. Winter wheat futures closed higher on Thursday through spillover strength from corn and soybeans, but Minneapolis spring wheat futures fell sharply on larger-than-expected U.S. plantings.

In Minneapolis-traded wheat futures and options, money managers increased their net short position through March 27 to 1,802 contracts from 653 a week earlier.

Editing by Susan Thomas

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