CHICAGO (Reuters) - Money managers sold Chicago-traded soybean oil futures and options at a record clip in the week ended Oct. 3, according to data from the U.S. Commodity Futures Trading Commission.
This produced the largest-ever weekly shift in speculator sentiment in the CBOT oilshare, which represents soyoil’s share of value in soybean products. (reut.rs/2yuuxzU)
Ever since the CBOT oilshare hit a nine-month high to open September, funds had been unwinding short soymeal/long soyoil spreads. But this was accelerated in the final days of the month with the U.S. Environmental Protection Agency suggesting the possibility of a reduction in 2018 biodiesel blending requirements.
Given the uncertainty for future demand, money managers slashed their bullish soyoil stance to 30,716 futures and options contracts from 75,629 in the week prior. This easily marked the largest-ever position swing on the vegoil in either direction. (reut.rs/2z3SUkX)
As a result, the oilshare long fell to 29,561 futures and options contracts from 81,121 the week before, well off the all-time high of 132,252 contracts set in the week ended Sept. 12.
Funds have switched to a long position in soybean meal for the first time since mid-April, but this had a very small impact on the oilshare move relative to the selling in soyoil. As of Oct. 3, money managers held a slightly bullish stance of 1,155 futures and options contracts compared with the 5,492-contract net short in the prior week.
Oilshare value fell another 1 percent late last week. Trade sources suggest that since Wednesday commodity funds have been net buyers of soymeal and net sellers of soyoil, meaning the oilshare long is likely even smaller heading into this week.
Speculators essentially maintained their views on corn and soybean futures as they await the U.S. Department of Agriculture’s monthly supply and demand report, due Oct. 12. Industry analysts are not anticipating any bullish surprises in the U.S. balance sheets, as fractional increases are expected in the corn and soybean crops.
In the week ended Oct. 3, money managers slightly trimmed their bullish stance on soybean futures and options to 27,758 contracts from 28,320 in the week before. (reut.rs/2z3RQ0t)
The move was a little more noticeable in corn futures and options, as funds extended their net short to 143,201 contracts from 133,442 in the previous week. (reut.rs/2z36k0h)
But in soybeans, the market seems to wants confirmation from USDA that the U.S. crop will actually be as large as many analysts believe, especially with harvest-delaying rains in the mix. Funds have been outright buyers of the oilseed since Wednesday amid a 2 percent jump in the benchmark November contract.
Even more uncertainty over soybeans stems from disappointing rainfall in Mato Grosso, Brazil’s lead producing region. The dry season has overstayed its welcome in many areas of the top-exporting country, and this is seen as a potential hindrance to the planting efforts that just began.
Funds were likely net sellers of corn late last week, though, as a bullish scenario for the yellow grain is further from reach. Even if the U.S. harvest is slightly reduced, it would hardly make a dent in the ample domestic and global supply.
Funds bought back some of their short position in Chicago wheat despite bearish stocks and production data from USDA in the middle of the period. Through Oct. 3, funds dialed back their net short to 56,475 futures and options contracts from 64,699 in the previous week. (reut.rs/2yuMmyu)
However, the benchmark December futures contract slid 1 percent at the end of last week, and commodity funds were likely net sellers of the soft red winter wheat.
Once again, spec moves in K.C. and Minneapolis wheat futures and options were very light last week. Funds cut their net long in K.C. wheat to 9,468 contracts from 11,418 in the prior week, and in Minneapolis wheat they slightly shaved their bullish stance to 5,383 contracts from 5,913 in the week before.
The opinions expressed here are those of the author, a market analyst for Reuters.