14.05.2023 (Nasdaq) - NAPERVILLE, Illinois, May 14 (Reuters) - Speculators made relatively minor changes to their Chicago grain and oilseed positions before the large U.S. government data release on Friday, which gave way to some multi-month or multi-year lows across the board.

That data, which included the Department of Agriculture’s first official cut at 2023-24 supply and demand, revealed larger-than-expected supplies for corn, soybeans and wheat globally, and for U.S. corn and soybeans.

Next season’s U.S. wheat supply outlook was below trade ideas as drought in the southern Plains is seen cutting winter wheat yield to an eight-year low, the worst relative result in at least two decades.

Chicago wheat futures Wv1 finished higher on Friday, though they lost more than 1% between Wednesday and Friday due to increasing optimism on the Ukraine grain deal. Futures had rallied more than 5% in the week ended May 9, with Russia threatening to quit the grain deal on May 18.

During that week, money managers cut their net short position in CBOT wheat futures and options to 116,906 contracts versus the previous week’s 126,324, which was funds’ most bearish since January 2018. Short covering was prominent.

Jitters on the Ukraine grain deal faded again late last week, though it is not clear the situation has improved. Turkey said Friday that parties to the pact were nearing an agreement after suggesting earlier in the week that a two-month extension could result. However, Russia denied on Friday that progress had been made.

Most-active Kansas City wheat futures KWv1 surged 16% in the week ended May 9. That prompted money managers’ largest round of net buying in K.C. wheat since September 2020 as they flipped to a modest net long position. Prices surged more than 4% on Friday following the U.S. crop forecast, reaching six-week highs during the session.

CBOT corn futures Cv1 drifted fractionally higher in the week ended May 9, and money managers cut their net short by around 8,500 to 109,643 futures and options contracts, predominantly on the addition of new longs. The previous week’s short was funds’ most bearish since August 2020.

U.S. corn stockpiles in 2023-24 are slated to surge 57% from this year’s levels, bolstered by a record crop and modest demand. The projected carryout of 2.22 billion bushels is near the maximum within the last decade-plus.

Most-active CBOT corn closed slightly higher Friday, but December 2023 futures CZ3 skidded to their lowest levels since the beginning of 2022. December corn lost nearly 2% in the last three sessions, ending Friday just above $5 per bushel.

SOYBEANS AND PRODUCTS

Most-active CBOT soybeans Sv1 rose fractionally in the week ended May 9, but November futures SX3 fell 1%, and commodity funds continued their selling streak.

Money managers cut their net long in CBOT soybean futures and options to 48,459 contracts from 56,373 a week earlier, establishing their least bullish stance since December 2021. They have not held a net short in soybeans since April 2020.

After two heavier weeks of selling, money managers in the week ended May 9 were net buyers of CBOT soybean meal futures and options despite a 2% tumble in most-active futures SMv1. The net long increased to 62,262 contracts, up 1,705 on the week.

Funds also broke their selling trend in CBOT soybean oil, cutting their net short to 13,484 futures and options contracts from 23,734 a week earlier, which had been funds’ most bearish since August 2019. Soyoil futures BOv1 were up more than 2% in the period.

USDA on Friday projected a very heavy global soy carryout for 2023-24, anchored by an enormous Brazilian crop but a less impressive rise in demand. U.S. stocks were pegged above expectations, but they are below the maximums of recent years.

The soy complex turned negative at the end of last week, especially for soybean oil futures, which fell 6.6% over the last three sessions. The most-active contract on Friday fell to the lowest levels since March 2021, and the settle of 49.52 cents per bushel was also the lowest since March 2021.

November soybeans fell 2.5% in the last three sessions, on Friday notching their lowest price since July. Most-active soybeans ended at $13.90 per bushel Friday, their lowest close since late October.

Most-active soymeal surged 3.3% in the last three sessions after Wednesday morning’s bottom of $416.10 per short ton, the lowest since December.

Karen Braun is a market analyst for Reuters. Views expressed above are her own.

https://www.nasdaq.com/articles/column-funds-pause-cbot-grain-selling-ahead-of-usda-data-braun