Healthy growth: Farmers harvest a field of corn near Salem, South Dakota. Much of the recent bearish tone is tied to favourable US crop outlooks, including a near-normal planting pace. — AFP
CHICAGO grain and oilseed futures declined sharply after the US Memorial Day holiday with speculators rejuvenating bearish sentiment, an about-face from last month’s short-covering streak.
Most-active Chicago Board of Trade (CBOT) corn, soybeans and soybean oil all fell more than 4% in the week ended June 4, and both CBOT wheat and soybean meal tumbled 6%.
Much of that week’s bearish tone was tied to favourable US crop outlooks, including a near-normal planting pace.
Initial US corn conditions last Monday came in at 75% good-to-excellent, above average and five percentage points better than the trade predicted.
In the week ended June 4, money managers boosted their net short position in CBOT corn futures and options to a five-week high of 212,706 contracts from 133,477 a week earlier.
That included nearly 70,000 new gross short positions, the most for any week since August 2019.
Rising demand
In CBOT soybean futures and options, money managers increased their net short to 59,741 contracts from the previous week’s 21-week low of 14,218. More than 37,000 new gross shorts were added, the most for any week since December 2019.
Funds had covered gross soybean shorts in the previous four weeks, though they had already been adding new corn shorts in the prior two weeks.
Open interest in soybean futures and options jumped 7% in the latest week to a seven-week high, and for corn it rose 5% to a two-year high.
The week ended June 4 featured one of CBOT wheat’s biggest downturns of the year, but money managers were relatively light sellers, extending their net short to 31,684 futures and options contracts from 25,431 a week earlier.
That ended a six-week streak of short-covering.
Net buying
Money managers through June 4 ended an eight-week streak of net buying in CBOT soybean meal futures and options, reducing their net long to 100,699 contracts from 118,282 a week earlier, mostly on the exit of longs.
The resulting position ties 2018 for the date’s most bullish.
The managed money net short in CBOT soybean oil futures and options reached a three-week high on June 4 of 57,690 contracts, up nearly 16,000 from the previous week.
That ties 2018 and 2019 for the date’s most bearish soyoil view.
Funds were net sellers of Kansas City wheat futures and options through June 4, snapping a six-week buying streak.
Minneapolis wheat was the only US grain or oilseed of which funds were net buyers last week, as they extended their net long to 7,732 futures and options contracts from 5,740 a week earlier, marking their ninth consecutive week as net buyers.
Fall in wheat numbers
Soybeans and soybean oil were unchanged over the last three sessions and corn and soybean meal both popped around 1.5%.
But wheat fell nearly 5% during that period, hitting one-month lows on Friday and notching its eighth consecutive losing session.
Wheat’s weakness came despite Russia declaring a federal emergency last Friday in 10 regions over weather-related crop damage.
Analysts’ Russian wheat crop estimates fell further last week, now up to 14% off original ideas with threats of additional cuts.
Soybeans sold off last Friday despite the first substantial US soybean sale to China since January.
The US Department of Agriculture (Usda) will issue its first health assessment for US soybeans soon.
The initial rating averaged 68% good-to-excellent over the last decade, it was reported.
Traders will also be watching tomorrow for Usda’s monthly supply and demand report, which analysts expect to show the contraction of global corn, wheat and soybean supplies. — Reuters
Karen Braun is a market analyst for Reuters. The views expressed here are the writer’s own.
