Funds’ bullish corn, soy views little changed after USDA’s supply cuts

Chicago corn and soybean futures surged after the US government slashed domestic supply outlooks last week, but against expectations, speculators' bullish bets were very little changed by comparison.

The US Department of Agriculture on Nov. 10 made historically large cuts to the US corn and soybean harvests. But the agency maintained or increased robust demand expectations, sending ending stock projections to multiyear lows, well below what traders predicted.

In the week ended Nov. 10, most-active corn futures rose 5.5 per cent while most-active soybeans jumped 7.7 per cent, the most for a five-day stretch in more than three years.

But in that week, money managers reduced their net long position in CBOT corn futures and options to 280,835 contracts from 290,080 a week earlier, according to data published on Monday by the US Commodity Futures Trading Commission.

That was against trade expectations that funds bought 72,500 corn futures during the period and it was the first time in 14 weeks that funds sold the yellow grain.

Money managers increased their net long in CBOT soybeans through Nov. 10 to 221,094 futures and options contracts from 210,957 in the prior week. They had been pegged as buyers of 67,500 futures contracts in that period, which would have established a new record long.

Outright soybean shorts are almost nonexistent after falling to just 2,924 contracts last week, the fewest since August 2012. Funds added outright shorts in corn for the first time in 14 weeks, and that outweighed the new longs.

Open interest in the week ended Nov. 10 surged 7.6 per cent for soybeans and 6.2 per cent for corn, placing total corn open interest at the highest levels since August 2019.

The commercial net short in corn reached 377,541 futures and options contracts through Nov. 10, the largest since July 2019, and the commercial soybean short hit a new high of 259,696 contracts. Combining the corn and soy positions would yield a net short some 17 per cent larger than the pre-2020 record set in 2012.

Most-active corn and soybean futures comfortably remain at seven-year highs for the time of year. The increase of coronavirus cases worldwide and the possible economic consequences continue to offer headwinds, but strong export demand and supply tightening keep limiting selling interest.

Since Nov. 10, CBOT corn has fallen 1.6 per cent, and trade sources estimate fund selling at 32,500 futures contracts. Soybeans have risen fractionally in the last four sessions, including a new high settle on Monday of $11.53-1/2 per bushel, and the total buying is pegged at 17,500 contracts.

Money managers increased their net long in CBOT soybean oil to 97,111 futures and options contracts through Nov. 10 from 89,051 a week earlier. That is their most optimistic view on the vegoil for the time of year since 2016.

Soybean oil futures have risen nearly 4 per cent since then, setting a near four-year high for the most-active contract on Monday. Soyoil futures are affected by movements in Malaysian palm oil futures, which on Friday reached their highest point in the benchmark contract since May 2012 on shrinking supplies.

Investors hold their most bullish-ever view on soybean meal for the time of year, though they trimmed their net long to 83,798 futures and options contracts through Nov. 10 from 85,130 a week earlier.

Most-active meal futures have slid more than 1 per cent over the last four sessions after reaching a two-and-a-half-year high last week.

Chicago wheat futures were nearly unchanged in the week ended Nov. 10, though money managers reduced their net long to 32,633 futures and options contracts from 48,605 a week earlier. That was their largest wheat selling week since August and it was driven by both new shorts and a reduction in longs.

That selling may have continued over the last four sessions as most-active futures have fallen 1.7 per cent. Unlike in corn and soybeans, open interest for Chicago wheat fell by 2.7 per cent in the week ended Nov. 10.

Funds barely touched their bullish bets in the other wheat contracts. They increased their Kansas City long by 470 futures and options contracts to 47,329 through Nov. 10, and they reduced their Minneapolis long by 360 contracts to 6,808.