COLUMN-Funds buy CBOT corn and soybeans amid poor finish to US crop -Braun
04.05.2023 (Nasdaq) - NAPERVILLE, Illinois, Sept 4 (Reuters) - The second half of August was exceptionally dry in the U.S. Corn Belt, likely trimming yields for corn and especially soybeans due to their reliance on late-season moisture. Speculators responded by boosting their bullish Chicago soybean bets, which they have held for more than three years, and easing bearishness in corn futures.
In the week ended Aug. 29, money managers cut their net short position in CBOT corn futures and options to 87,348 contracts from 106,135 in the week before, which had been their most bearish corn view since early May.
Funds added gross corn longs for the first time in four weeks and covered shorts for the first time in five weeks. Most-active CBOT corn futures Cv1 rose 1.5% during the period but stayed below $5 per bushel throughout.
CBOT soybeans Sv1 jumped 3.5% in the week ended Aug. 29, touching a one-month high last Monday of $14.09-1/2 per bushel, some 10% above the August low. The most-active November contract last week traded at 2.8 times the price of December corn, the highest bean-corn ratio since 2016.
Soybean futures’ relative strength versus corn is reflected in funds’ positioning. Money managers through Aug. 29 added nearly 33,000 soy contracts to their net long, which reached 90,985 futures and options contracts. That was their biggest net buying week since mid-June.
Last week’s rise in oilseed optimism extended to the soy products, as CBOT soybean meal futures SMv1 increased more than 4% and soybean oil BOv1 added 2.5%. Money managers increased their soymeal net long to 73,753 futures and options contracts versus 52,820 in the prior week.
That was funds’ biggest meal buying week since December, and the new position is their second most bullish for the week in data back to 2006, trailing only last year. However, short covering slightly outweighed the addition of new longs.
Money managers increased their net long in CBOT soybean oil to an eight-month high of 58,317 futures and options contracts as of Aug. 29, up from 55,077 in the week before. Most-active soyoil futures have traded above 60 cents per pound since mid-August, their longest 60-plus streak since January.
Most-active CBOT wheat futures Wv1 lost more than 4% in the week ended Aug. 29. Money managers were net sellers of CBOT wheat futures and options for a fifth consecutive week, expanding their net short to a 10-week high of 79,881 contracts from 70,921 a week earlier.
CBOT wheat declined another 1% over the last three sessions, ending at $5.95-1/2 per bushel on Friday, wheat’s lowest close since May 31. Most-active futures have not consistently traded that low since late 2020, despite no resolution to the Black Sea grain deal that Russia quit in July. Turkey and Russia will hold talks on Monday over whether to revive the agreement.
Corn futures dropped 1.1% over the last three sessions, soybeans lost 1.7%, soymeal lost 3% and soyoil was mostly unchanged. Forecasts as of Friday showed scattered rain possibilities for parts of the U.S. Corn Belt this week, though the moisture will come too late for some fields.
The U.S. Department of Agriculture has announced a daily export sale of U.S. soybeans for six consecutive trading days, though Brazilian supplies will continue threatening U.S. shipments. Brazil last week authorized farmers in Brazil’s largest producing state of Mato Grosso to plant soybeans earlier than the usual Sept. 15 start.
Karen Braun is a market analyst for Reuters. Views expressed above are her own.
Graphic- Managed money net position in CBOT corn futures and options https://tmsnrt.rs/45zhSYc
Graphic- Managed money net position in CBOT soybean futures and options https://tmsnrt.rs/3P4IDN0
Graphic- Managed money net position in CBOT soybean meal futures and options https://tmsnrt.rs/45Y19h3
(Reporting by Karen Braun; editing by Jonathan Oatis)
((karen.braun@thomsonreuters.com; X: @kannbwx))