CHICAGO (Reuters) - (The opinions expressed here are those of the author, a market analyst for Reuters.)
Speculators continue to buy Chicago-traded soybean and soybean meal futures at a never-before-seen clip as the Argentine drought has slashed crop estimates to six-year lows.
Last month was the driest February in more than 30 years in leading soybean meal exporter Argentina, and investors are all over it.
In the week ended Feb. 27, money managers boosted their bullish bets in CBOT soybean meal futures and options to a new record of 106,280 contracts on the net, according to data from the U.S. Commodity Futures Trading Commission.
This compares with a net long of 85,089 contracts in the previous week and surpasses the week ended April 24, 2012 for the most bullish-ever stance. (tmsnrt.rs/2FeVtqh)
But this statistic does not sufficiently highlight just how bullish speculators have become over the protein-rich feed ingredient. When combining the managed money position with that of other non-commercial, speculative investors in the “other reportables” category, meal bets are through the roof.
Through Feb. 27, this combined spec net long in soymeal totaled 149,560 futures and options contracts, dwarfing the pre-2018 high of 107,225 contracts set in April 2012. (tmsnrt.rs/2CUcHUH)
However, the recent “toppy” trade in soybean meal futures had commodity funds selling on Friday, according to trade sources. But that did not offset the buying on Wednesday and Thursday, rendering spec meal long even larger heading into the new week.
Speculators continue to buy soybeans at a lightning pace. In the six weeks ended Feb. 27, money managers’ net purchase of soybean futures and options totaled 250,777 contracts, shattering the record set in the previous week of 191,946.
Prior to 2018, the six-week record for net buying in soybean futures and options was the period ended April 12, 2016. (tmsnrt.rs/2FjK2gO)
Through Feb. 27, money managers’ net soybean long exploded to 147,380 futures and options contracts from 99,111 in the prior week. And they have been outright buyers in the days since, with traders indicating that commodity funds bought nearly 30,000 bean contracts over the last three sessions.
Argentina’s corn crop has also come into question, along with just how much safrinha corn, or second-crop corn, neighbor Brazil will plant. In the week ended Feb. 27, money managers extended their net corn long to 59,120 futures and options contracts from 18,674 in the previous week. (tmsnrt.rs/2F7zsdv)
But the buying only intensified in the days since as the Argentine drought as well as dryness for the U.S. wheat crop cranked up CBOT corn futures. Trade estimates suggest that Thursday’s corn buying was funds’ largest for a single day since July 10.
Soybean oil remains sidelined in speculative investors’ latest bullish surge in CBOT futures and options.
Money managers cut their net bean oil short to 9,347 futures and options contracts through Feb. 27 from 27,135 a week earlier, but they were most likely net sellers of the vegoil between Wednesday and Friday.
Throughout the latest CFTC reporting period, wheat mostly stayed on the back burner similar to the previous week, though some modest buying begin at the end of the period. But on Wednesday and Thursday, wheat futures surged to multi-month highs as drought was expected to continue for the U.S. Plains heading into the critical spring months.
Trade sources indicate that over those two days, commodity funds executed their largest two-session buying streak in wheat since June 30 and July 3 of last year, just before the summer rally peaked. But a good portion of last week’s buying was offset by heavy selling amid profit-taking on Friday.
Through Feb. 27, money managers trimmed their net short position in Chicago wheat futures and options to 60,632 contracts from 67,039 in the prior week. But they also shed about 2,000 K.C. wheat contracts from their net long, which stood at 11,008 futures and options contracts at Tuesday’s close.
Money managers’ view toward Minneapolis wheat futures and options remained bearish for the fifth week in a row, dropping to a net short of 1,301 contracts through Feb. 27 from 827 in the prior week.
Graphic- Managed money net position in CBOT soybean meal futures and options tmsnrt.rs/2FeVtqh
Graphic- Speculators’ (managed money + other reportables) net position in CBOT soybean meal futures and options tmsnrt.rs/2CUcHUH
Graphic- Managed money net position in CBOT soybean futures and options tmsnrt.rs/2FjK2gO
Graphic- Managed money net position in CBOT corn futures and options tmsnrt.rs/2F7zsdv
Graphic- Managed money combined net position in CBOT/MGEX futures and options tmsnrt.rs/2CTDiRM
Editing by Lisa Shumaker