Speculators went on their biggest buying spree in Chicago-traded grains and oilseeds in more than a year over continued uncertainty about the U.S. corn and soybean harvests and China’s blistering buying pace of those products.
Grain farmers harvest corn amid the coronavirus disease (COVID-19) pandemic in Marion, Texas, U.S., July 17, 2020. REUTERS/Adrees Latif
As of Sept. 1, investors held net longs across CBOT corn, wheat, soybeans and products, and Kansas City wheat, the first such instance since July 2015. They maintain bearish views in Minneapolis wheat, though they are the most bullish toward combined CBOT grains and oilseeds for the date since 2012.
In the latest week, money managers dumped around 136,000 outright short positions across those seven grains and oilseeds. The remaining total of 378,580 is funds’ fewest number of shorts since July 2017. That is according to data published Friday by the U.S. Commodity Futures Trading Commission.
Funds also added about 86,000 gross long positions, the most for a week since March 2018, and the new number of total longs at 682,851 was the highest since August 2018.
In the week ended Sept. 1, hedge funds and other money managers flipped to a net long in CBOT corn futures and options of 18,659 contracts. That compares with a net short of 61,489 contracts a week prior, and the move was almost entirely due to short covering.
Trade sources had pegged last week’s corn buying at 13,500 futures contracts, so funds’ net purchase of 80,148 futures and options contracts was drastically above expectations. That was their largest weekly buy since June 4, 2019, and they had not been net long in corn since mid-August 2019.
China has been buying extraordinary amounts of U.S. corn for delivery over the next year. If it is all shipped, it could more than double the previous record for annual U.S. corn exports to the Asian country.
This season’s dryness across the U.S. Corn Belt has clipped crop expectations. Analysts see U.S. corn inventory a year from now in the mid-2-billion-bushel range, which would be a 33-year high but well below prior predictions that exceeded 3 billion bushels.
Most-active CBOT corn futures were unchanged over the last three sessions, and commodity funds are not expected to have changed their views on the yellow grain.
Through Sept. 1, money managers extended their net long in CBOT soybean futures and options to 162,607 contracts from 109,288 a week earlier. That is funds’ most bullish soybean view for the date since 2012, and about 85% of the move owed to new longs.
The story for soybeans is similar to that of corn: Unfavorable weather has diminished U.S. crop hopes, but China is consistently placing large orders for the oilseed. Traders see the U.S. government’s soy stock outlook dropping by more than 20% from last month.
Most-active soybean futures on Friday hit the highest mark since June 11, 2018, and the contract rose 1.4% over the last three sessions. Funds are pegged to have bought around 13,500 soybean futures during that time.
Investors boosted their net long in soybean meal futures and options to 15,871 contracts through Sept. 1 from 3,560 a week earlier. Their net long in soybean oil futures and options surged to 81,557 contracts from 67,690 in the prior week, and the new stance is their most bullish since January.
Soybean meal futures rose 2.1% in the last three sessions, and on Friday they notched their highest close since late March. Funds were seen as net buyers in meal late last week, and they were likely light sellers of oil, although the vegoil ended flat over the last three days.
In the week ended Sept. 1, money managers’ net long in CBOT wheat futures and options exploded to 32,469 contracts from 1,517 a week earlier. New longs accounted for about 55% of that move, and at 93,329, the number of outright wheat longs was the largest since late February.
Funds also ditched their bearish views in Kansas City wheat futures and options through Sept. 1, establishing a net long of 3,160 contracts. That is their first bullish K.C. view since early May, and the week’s net purchase of 24,276 contracts is record large in data back to June 2006.
Both CBOT and K.C. futures slid late last week, and most-active CBOT wheat dropped 2.4%. China’s streak of U.S. agricultural purchases has also boosted optimism for U.S. wheat exports, but No. 1 supplier Russia is expected to have harvested a very large crop, increasing global competition.
Commodity funds were predicted to have sold 15,500 CBOT wheat futures between Wednesday and Friday.
Minneapolis wheat is the only grain on which investors maintain pessimism. However, they slashed their net short through Sept. 1 to 10,052 futures and options contracts from 17,316 a week earlier. That is their least bearish spring wheat view since February, and like K.C. wheat, the week’s net buying was record large.
The opinions expressed here are those of the author, a market analyst for Reuters.
Source: Reuters (Editing by Leslie Adler)
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