Column: Funds' bullish corn bets backed by colossal U.S. sales to China -Braun
01/02/2021 24:00
(The opinions expressed here are those of the author, a market
analyst for Reuters.)
By Karen Braun
FORT COLLINS, Colo., Jan 31 (Reuters) - Speculators’
bullishness in Chicago corn paused a couple weeks ago with
futures trading at more than seven-year highs, but an incredible
run of U.S. corn sales to China last week may have refreshed
investor optimism.
The week ended Jan. 26 was very volatile for CBOT corn
futures and included a historic plunge in prices followed by a
strong rebound, and the most-active contract finished the period
up 1.2%.
Through Jan. 26, money managers increased their net long in
CBOT corn futures and options to 364,229 contracts from 349,495
a week earlier, according to data from the U.S. Commodity
Futures Trading Commission. urn:newsml:reuters.com:*:nAQN03QJVY
The addition of new longs was the bigger driver, but the
move marked the sixth consecutive week that money managers
covered short corn positions. The number of outright shorts
dwindled to 33,220 contracts as of Jan. 26, the fewest since
November 2012. (https://tmsnrt.rs/3otMZ0R)
Other reportable traders executed their largest corn selling
week in nearly three years, reducing their net long by about
25,000 contracts to 168,757 from the previous week’s all-time
record long. Index traders also reduced corn positions through
Jan. 26.
The U.S. Department of Agriculture on Friday confirmed that
China booked 2.1 million tonnes of U.S. corn, the largest-ever
single sale to the Asian country. urn:newsml:reuters.com:*:nL1N2K425Z That brought
China’s four-day buying total to 5.85 million tonnes, more corn
than the United States has ever shipped to China in an entire
marketing year.
CBOT corn futures Cv1 on Friday hit $5.53-3/4 per bushel,
the most-active contract’s highest since June 2013. The contract
rose 2.8% over the last three sessions, and commodity funds were
pegged to have bought 40,000 corn futures during that period.
urn:newsml:reuters.com:*:nL1N2K43AL
If that figure is true, money managers ended last week’s
trading with a corn net long above 400,000 contracts for the
first time in a decade.
SOYBEANS AND PRODUCTS
Most-active soybean futures are still at eight-year highs
for the time of year, though they have recently traded well off
the highs notched in mid-January. Speculators are also notably
less bullish toward the oilseed than they were four months ago.
Soybean futures Sv1 also went on a rollercoaster ride in
the week ended Jan. 26, finishing the period down 1.1%. But
money managers slightly extended their net long in CBOT soybean
futures and options to 156,590 contracts from 151,898 a week
earlier. (https://tmsnrt.rs/3ou5bY7)
Prices were largely unchanged over the last three sessions
and funds are not expected to have adjusted their views, though
soybean traders last week were watching harvest delays in Brazil
and some new-crop U.S. soybean sales to China.
Money managers trimmed their net long in soybean meal
futures and options for the fourth consecutive week through Jan.
26, reducing it by just over 3,000 contracts to 74,590. Futures
fell 1.3% between Wednesday and Friday, and funds are expected
to have shed some more meal length.
Soybean oil futures surged more than 5% through Jan. 26, and
money managers boosted their net long to 107,334 futures and
options contracts from 90,699 a week earlier. That marks their
most bullish ever end to January, slightly above the same points
in 2017 and 2020.
Soyoil futures rose another 1.6% over the last three
sessions, hitting 45.58 cents per pound on Friday, the
most-active contract’s highest since July 2013.
WHEAT
Wheat prices have somewhat followed moves in corn recently
as higher corn prices could ultimately increase wheat feeding,
though market watchers have also been focused on the supply
situation in top exporter Russia, which formally approved a
higher wheat export tax on Tuesday.
Chicago wheat futures were down 1% in the week ended Jan.
26, but money managers bumped up their net long by less than
1,000 futures and options contracts to 21,275 contracts. Prices
fell fractionally in the subsequent three sessions. (https://tmsnrt.rs/3iYkEid)
Money managers continued to increase bullishness in Kansas
City wheat futures and options through Jan. 26, adding more than
2,000 contracts on the week, resulting in a net long of 60,239
contracts. That is funds’ most optimistic stance since August
2018 and it is their most bullish ever for the time of year.
Funds continued their buying streak in Minneapolis wheat
through Jan. 26, increasing their net long by more than 1,000
futures and options contracts on the week to 14,659 contracts.
That is their biggest net long in spring wheat since June 2017.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic- Managed money net position in CBOT corn futures and
options https://tmsnrt.rs/3otMZ0R
Graphic- Managed money net position in CBOT soybean futures and
options https://tmsnrt.rs/3ou5bY7
Graphic- Managed money net position in Chicago wheat futures and
options https://tmsnrt.rs/3iYkEid
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Editing by Diane Craft)
((karen.braun@thomsonreuters.com; Reuters Messaging:
karen.braun.thomsonreuters.net@reuters.com; Twitter: @kannbwx))