NAPERVILLE, Illinois, Sept 15 (Askume) – Speculators closed short positions in Chicago grains and oilseeds for a second consecutive week last week as drought hit crops in agricultural regions of the United States and Brazil.
Investors are still overall bearish on the corn, soybean and wheat markets, but their view on corn is no longer history.
Fund managers reduced their net short position in CBOT corn futures and options to 132,134 contracts in the week ended Sept. 10 from 176,211 contracts a week earlier. Most of the move came from short covering, but funds increased their net long positions for the third consecutive week.
From late June to early September, the fund’s net short position in corn rose to its highest level for the same period that year. Last week’s retracement roughly evened things out for the same dates in 2023 and 2019, though at this point in those years, investors were simply exiting longs and starting to add to shorts.
Fund managers’ net short position in CBOT soybeans remains the largest this year, but they reduced their positions in futures and options contracts to 130,601 as of Sept. 10, from 154,096 in the previous week.
This is due to short covering and a slight reduction in total longs, which shows that funds are not optimistic about their latest investment in soybeans.
Although CBOT futures declined slightly, short covering was seen in both corn and soybeans last week. Prices have risen in the last three sessions while the USDA reaffirmed its forecast for US corn and soybean production.
Traders may be wondering if US corn and soybean production expectations could drop further given the unusually dry weather over the past few weeks.
Eyes are also on Brazil’s biggest soybean and corn producing states, where soil moisture has fallen to a 30-year low, threatening to delay planting. Brazil, the world’s biggest exporter of soybeans, is expecting a record crop next season.
CBOT December corn futures closed up nearly 2% at $4.13-1/4 a bushel on Friday, the contract’s highest level in seven weeks. November soybeans closed at $10.06-1/4 a bushel on Friday, slightly below the month-to-date average.
CBOT December wheat has risen nearly 8% in the past two weeks, reaching $5.98-3/4 a bushel on Friday. That was a 12-week high for the most active contract.
Dry weather in Ukraine and Russia threatens to hamper winter wheat sowing, rekindling export tensions between the two main suppliers.
Last week a Ukrainian grain ship was attacked by a Russian missile , according to Ukraine , the first missile attack on a civilian ship transporting grain since Moscow launched its invasion in February 2022.
In the week ended September 10, fund managers reduced their net short positions in CBOT wheat futures and options to 29,397 contracts from 42,624 contracts a week earlier, a 15-week low.
The funds’ wheat position is no longer abnormally bearish and is only one-third larger than last year’s net short position. As of the end of last week, 2023 wheat futures prices were essentially unchanged from the same week earlier.
On Monday, traders will focus on US soybean and corn harvest progress, as well as monthly US soybean processing data, with August trading expected to hit a record high.
Late last week, weather forecasts for key areas of Brazil, Russia and Ukraine said drought would persist for another two weeks, and traders will be keeping a close eye on any changes that could hamper planting efforts.
Karen Brown is a market analyst at Askume. The views expressed above are her own.
The views expressed are those of the author. 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.
