September 25, 2017 / 6:00 PM / 5 months ago

Spec views of CBOT corn, soy moving in opposite directions: Braun

CHICAGO (Reuters) - Speculators have dialed back on overall bearishness toward Chicago-traded grains and oilseeds for the second week in a row, but their views on corn versus soybeans are increasingly divergent. (reut.rs/2jRcHjO)

In the week ended on Sept. 19, money managers flipped to a bullish stance in CBOT soybean futures and options for the first time since early August but extended bearishness on corn. Fund selling in wheat has also tapered, and new longs are finding a place in the market in the case of Chicago wheat.

Money managers began scaling back sharply on their record long position set in the previous week for the CBOT oilshare, which measures soyoil’s share of value in soybean products. (reut.rs/2xXWC2c)

The oilshare fell on Friday to its lowest since July 28 as the unwinding of meal/oil spreads continued. Late in the week, funds considerably stepped up their buying of soymeal futures and continued to sell soyoil.

Healthy export demand for U.S. soybeans has provided the primary boost to that market. As of Friday, the U.S. Department of Agriculture had announced a daily sale of U.S. soybeans in 10 of the last 11 business days with a combined volume greater than 3 million tonnes.

Funds probably extended bullish soybean bets late last week. On Friday, the benchmark November contract broke through its 200-day moving average for the first time since Aug. 10, the same day the USDA stunned the market with a much larger-than-expected projection for U.S. yield.

The U.S. corn harvest is slowly ramping up, and the introduction of new supplies into an already oversupplied market has and will continue to pressure futures.

But the idea that China may import more corn to support its ethanol fuel plans, along with strength in soybeans and commodities in general, prevented funds from lengthening their bearish views on the yellow grain late last week.

Speculators have built a large short stance in Chicago wheat over the last several weeks, and that has encouraged some covering of those positions on weather concerns for the grain in Australia and Argentina. Trade sources suggest that commodity funds were net buyers of wheat futures over the previous three sessions.

PESSIMISM DIALBACK

In the latest week, money managers drastically downsized bearish bets in CBOT soybean meal futures and options to 16,919 contracts from 31,817 in the prior week, according to data from the U.S. Commodity Futures Trading Commission.

At the same time, they trimmed their enormous long in soybean oil – to 92,870 futures and options contracts from 100,435 – and these two moves resulted in a significant scaling-back of the record long position in the CBOT oilshare.

Through Sept. 19, funds were net long 109,789 futures and options contracts in the oilshare, which is the sixth-largest long position on record. However, activity over the last three sessions suggests that funds have significantly reduced this bullish stance even further.

In the soybean market, speculators have crossed back into bullish territory, establishing a net long position of 13,747 futures and options contracts versus the net short of 4,408 contracts in the previous week. This is their first optimistic stance on the oilseed since early August – before the USDA crop report. (reut.rs/2jQKSrX)

Bearishness built even further in CBOT corn futures and options last week as funds extended their net short to 134,606 contracts from 119,412 in the previous week. This is the most negative view speculators have had on the grain since the first week in June. (reut.rs/2jRpZwS)

Funds reduced their sizable short position in Chicago wheat futures and options for the second week in a row, which now stands at 79,568 contracts compared with 83,745 in the week prior. (reut.rs/2jRqfvQ)

Expansion in speculators’ attitudes is present on both ends of the spectrum in CBOT wheat. Although the overall net position is similar to that of four weeks ago, the amounts of outright shorts and longs have both increased by more than 10 percent since then.

In the K.C. wheat market, downward momentum has tapered in recent weeks. Through Sept. 19, funds had shaved their bullish bets to 12,415 futures and options contracts from 13,031 in the previous week.

This marked the 10th week in a row that speculators shed optimism on the hard red winter wheat, but the latest reduction was the smallest yet.

Bullishness continued to wane in Minneapolis wheat futures and options as funds cut their net long to 6,093 contracts from 7,005 in the prior week. The amount of outright shorts in the hard red spring wheat market is the largest since late April, and long positions are the fewest since the end of May.

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

Editing by Lisa Von Ahn

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