NAPERVILLE — Speculators’ bullish Chicago corn bets recently passed the two-year milestone after a somewhat unusual acceleration throughout August, driven by U.S. crop concerns.
Money managers have held a net long position in CBOT corn for 105 weeks, the longest since the 167-week stretch between April 2010 and June 2013, the last time a global supply shortfall spanned multiple years.
In the week ended Aug. 30, money managers increased their net long in CBOT corn futures and options to 221,467 contracts from 182,216 a week earlier, according to the U.S. Commodity Futures Trading Commission.
That is funds’ most optimistic corn stance in two months, marking their fifth consecutive week as net buyers. The latest move was primarily motivated by new longs while the previous week’s buying was mostly short covering.
Since corn futures reached an eight-month low in late July, money managers have increased gross corn longs by more than a third, very uncommon for this time of year. The only other notable instances are 2010, 2011 and 2012, all years with legitimate U.S. crop troubles and minimal gross shorts.
Market participants believe that U.S. corn yield could be much lower than the Department of Agriculture’s August forecast of 175.4 bushels per acre, further straining already-tight supplies.
Surveys by brokerage firms StoneX and Allendale last week put the yield at 173.2 and 172.4 bpa, respectively, but other analysts have floated figures below 170.
Most-active corn futures rose more than 3% through Aug. 30, reaching a two-month high last Monday of $6.83-3/4 per bushel. However, the contract fell 1.7% in the last three sessions on profit-taking and renewed fears for a global economic slowdown.
Speculators have not held a bearish soybean position since April 2020, but the optimism has stagnated in the last two months as their net long has held around 100,000 futures and options contracts.
Most-active soybeans have traded within a $2 range in those two months, including a seven-month low of $12.88-1/2 per bushel on July 22. The contract settled at $14.20-1/2 on Friday.
Soybeans drifted fractionally lower in the last three sessions after falling 2% in the week ended Aug. 30. Money managers were modest sellers that week, reducing their net long by about 2,700 to 101,801 futures and options contracts, above the 69,141 observed in the same week last year.
USDA last month pegged U.S. soybean yield at a record-tying 51.9 bushels per acre, and many recent market estimates remain close to that number despite the rarity of a good soybean/bad corn combination. Large soy crop prospects have limited futures gains, but funds’ gross short positions remain light.
Top soybean buyer China started booking some larger U.S. cargoes late last month, but a USDA data snafu will keep weekly export sales data off the market until Sept. 15, making confirmation more difficult for analysts. Daily export announcements are still running.
Chicago wheat futures have been trading around the $8-per-bushel mark since speculators crossed into bearish territory two months ago.
Money managers’ net short has slowly grown since then, though they were modest buyers through Aug. 30, reducing their position to 22,247 futures and options contracts from 26,069 a week earlier, coinciding with a multi-week top in futures.
Open interest in CBOT wheat futures and options has been notably light this year and has steadily weakened further since the late-February Ukraine invasion. As of Aug. 30, wheat open interest was a 17-year low for the date and down 19% from the same date last year. Karen Braun is a market analyst for Reuters. Views expressed above are her own.
(Editing by Matthew Lewis)