Funds stay with bearish CBOT corn views despite supply drop

SPECULATORS’ bearish Chicago corn stance has been relatively consistent since mid-March, but overall supply potential has eased since then given smaller US corn plantings, questionable weather in Brazil and unprecedented disease in Argentina.

In the week ended April 9, money managers increased their net short position in Chicago Board of Trade (CBOT) corn by about 4,000 contracts to 263,554 futures and options contracts, a five-week high but little changed from the previous four weeks.

Most-active CBOT corn futures had risen 1% during that week, though prices are at four-year lows for mid-April as world corn stocks should safely rise from year-ago levels. But that increase may be smaller than previously thought as South American corn crop estimates have declined.

Traders are juggling those production issues with demand uncertainties abroad. Key buyer China has reportedly cancelled some Ukrainian corn cargoes, and a state-affiliated analyst last Friday said China is cancelling corn from Europe, though it is unclear if that referred to Ukraine.

However, China increased its 2023-2024 corn import forecast by 14% last Thursday. The country is projected to raise another record corn crop in 2024-2025, though Beijing said last week that expanding crop production will be difficult.

Chinese soybean demand is also in question as Beijing reported first-quarter soybean imports at four-year lows, though exporter data appears to suggest better volumes. US soy export demand has been sluggish lately, and Chicago soybean prices are also at four-year lows for the date.

Money managers through April 9 maintained a meaty net short position in CBOT soybean futures and options, expanding it by about 1,000 to 139,310 contracts. Most-active CBOT soybeans were unchanged that week, though soybean meal rose 2% while soybean oil lost 2%.

CBOT oilshare, which measures soyoil’s share of value in the soy products, reached a six-month high earlier this month, though speculators unwound some of those positions in the week ended April 9.

Money managers were net buyers of nearly 19,000 contracts of CBOT soybean meal, the most for any week since October. That was largely on short covering, and it slashed the managed money net short to 24,072 futures and options contracts.

Funds abandoned their short-lived net long in CBOT soybean oil futures and options, establishing a net short of 4,128 contracts versus the net long of 8,383 a week earlier.

CBOT wheat futures reached five-week highs in the week ended April 9, climbing more than 2%. Money managers trimmed their net short to 86,568 futures and options contracts from 91,944 in the prior week, and the new stance is slightly less bearish than a year ago.

CBOT corn, soybeans, wheat and soymeal all had strong performances last Friday, though soyoil was weaker, reaching five-week lows last Friday. This week, traders will be watching early US planting progress, though corn is usually just 5% planted by this date.

Analysts expect data on Monday to show record US soybean processing in March, following a strong February volume that topped all trade estimates.

Eyes will also stay on Brazil, where inconsistent weather has threatened to trim the heavily exported second corn crop. — Reuters

Karen Braun is a market analyst for Reuters. The views expressed here are the writer’s own.