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Funds relax CBOT bearishness ahead of USDA data: Braun
October 2, 2017 / 7:18 AM / in 16 days

Funds relax CBOT bearishness ahead of USDA data: Braun

FILE PHOTO: Workers empty corn kernels from a grain bin at DeLong Company in Minooka, Illinois, September 24, 2014. REUTERS/Jim Young/File Photo

CHICAGO (Reuters) - After August’s sharp plunge into bearish territory, speculators in the Chicago-traded grains and oilseeds market have recently eased their pessimistic views while awaiting data from the U.S. Department of Agriculture and results from the ongoing U.S. corn and soybean harvests. (reut.rs/2yf00G5)

Money managers extended bullish soybean bets in the week ended Sept. 26 on robust demand and chart-based buying. This came despite a fractional loss in November soybean futures over the period, which stemmed from strong U.S. harvest reports and beneficial rains in Brazil.

Large short bets in both the corn and wheat markets likely prevented a further extension in grain bearishness last week as the market positioned itself for USDA’s stocks report and small grains summary, which were published Friday.

The stocks data was bullish for corn and soybeans as the U.S. inventories as of Sept. 1 landed notably below both ranges of pre-report trade estimates.

The wheat market had been preparing for a cut to both production and year-on-year stocks in the United States. But USDA’s small grains summary revealed an increase in overall wheat production and the Sept.1 stocks did not fall as far as analysts had predicted.

Speculators’ long position in the CBOT oilshare, which measures soyoil’s share of value in soybean products, took another dive last week as funds sharply cut both bullish soyoil and bearish soymeal bets.

On Tuesday, soyoil futures came under heavy pressure after the U.S. Environmental Protection Agency said it was mulling a reduction in 2018 biodiesel blending requirements into the domestic fuel supply, which traders feared could threaten demand.

Oilshare value declined 2 percent over the last three sessions, meaning the spread between speculative views in soyoil and soymeal has closed even further.

Trade sources suggest that since Wednesday, commodity funds have been net buyers of corn, soybeans and soybean meal, net sellers of wheat, and outright sellers of soybean oil.

Despite the price-supportive stocks data, reports of strong U.S. corn and soybean yields have been trickling in over the past couple of weeks as the harvest gains momentum. The market now awaits the next supply and demand update from USDA on Oct. 12, which should support or refute the larger U.S. crop ideas.

FUND POSITIONING

Money managers last week increased the bullish stance on CBOT soybean futures and options that they had re-established a week earlier, according to data from the U.S. Commodity Futures Trading Commission.

Through Sept. 26, funds held a net long position of 28,230 soybean futures and options contracts compared with 13,747 in the previous week. The upward momentum in spec attitude toward the oilseed within the last four weeks bucks the typical trend – sentiment has generally declined in Septembers past. (reut.rs/2yN12G4)

In the CBOT oilshare, the net long fell to 81,121 futures and options contracts from 109,789 in the prior week, well off the record of 132,252 contracts set two weeks earlier. As of now, 2016 has likely regained control of the record books for oilshare bullishness late in the year. (reut.rs/2yMkFyd)

The oilshare move came as funds chopped their net soyoil long to 75,629 futures and options contracts from 92,870 a week earlier. They also scaled back their soymeal short considerably to 5,492 futures and options contracts from 16,919, and the new stance is the least bearish in nine weeks.

Funds reduced bearish bets in Chicago wheat futures and options for the third week in row, mostly via short-covering. Through Sept. 26 funds were net short 64,699 contracts versus 79,658 in the week prior, and the stance is the third most bearish for the week behind 2016 and 2014. (reut.rs/2yOzvEq)

Speculators’ sentiment toward CBOT corn, K.C. wheat, and Minneapolis wheat was nearly unchanged on the week, though the positions were reduced across all three.

In corn, money managers ever-so-slightly pulled back their bearish stance to 133,442 futures and options contracts from 134,606 in the prior week. The position is nearly even with the same week in 2013 but less extreme than year ago, when the spec short tallied 176,844 contracts.

Funds downsized bullish bets in K.C. wheat futures and options for the eleventh week in a row, which stand at 11,418 contracts from 12,415 in the previous week. They also shaved their net long in Minneapolis wheat to 5,913 futures and options contracts from 6,093 a week earlier.

(The opinions expressed here are those of the author, a market analyst for Reuters.)

Editing by Lisa Shumaker

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