NAPERVILLE, Illinois, Sept 8 (Askume) – Speculators engaged in the biggest short covering on U.S. grains and oilseeds in four months last week, although collective sentiment remains mostly pessimistic.
This is because of ample global supply and weak demand for US soybean exports, which has led to a severe shortage of funds for Chicago soybeans. But demand for US corn has been good and investors’ pessimism about prices has weakened.
December CBOT corn futures rose more than 4% in the four-day week ended Sept. 3 after hitting a low of $3.85 per bushel the previous week.
This is the lowest price since October 2020 for the most actively traded corn futures.
Fund managers reduced their net short positions in CBOT corn futures and options by about 66,000 contracts to 176,211 contracts in the week ended September 3, their most pessimistic stance since May. While short covering dominated the week, total long positions also increased significantly.
The fund’s new corn net short position is only half the size of the record set in July, though it is similar to the largest net short position during the same period in 2016.
But in soybeans, funds’ massive net short position remains firmly at record highs, double the previous high set in 2019.
As of Sept. 3, fund managers reduced their net short positions in CBOT soybean futures and options to a nine-week low of 154,096 contracts, a decrease of more than 22,000 contracts this week. But unlike corn, the overall number of soybeans has fallen slightly.
As of September 3, CBOT November soybean prices were up more than 2%, continuing to rise from a low of $9.55 per bushel in mid-August.
Investors are already holding large short positions in corn and soybeans heading into the US summer growing season, taking early advantage of bumper yields for both crops, which has reduced price volatility, as has been the case in past years.
This week markets will focus on the USDA’s monthly supply and demand report on Thursday. Analysts expect US soybean production to remain at record levels, but corn production is expected to fall slightly.
December corn and November soybean futures have both declined slightly over the last three trading days, but are trading above $4 and $10 per bushel, respectively.
Wheat and soy products
As of September 3, fund managers covered short positions in CBOT wheat futures and options, bringing the net short position to a 13-week low of 42,624 contracts, a reduction of more than 13,000 contracts this week.
CBOT December wheat hit a record low of $5.20-3/4 a bushel last week but was up nearly 6% through Sept. 3.
Soymeal is the only major U.S. grain or oilseed that funds remain long, having been net long since mid-April. That all but disappeared in mid-August when futures hit new lows, but speculators have been net buyers in the weeks since.
As of Sept. 3, fund managers had more than quadrupled their net long position in CBOT soymeal to 23,171 futures and options contracts, with half new longs and half exiting shorts.
But the overall theme of the week – short covering – was most prominent in CBOT soyoil. Fund managers reduced their net short position by about 21,000 contracts to 47,527 futures and options contracts, although this remains heavily bearish from a historical perspective.
Karen Braun is a market analyst at Askume. The opinions expressed above are her own.
The views expressed are solely the author’s own. They do not reflect the views of Askume News, which is committed to integrity, independence and non-partisanship in accordance with the principles of trust.
