Funds get short CBOT corn but ink record bullish oilshare bets: Braun
(The opinions expressed here are those of the author, a market analyst for Reuters.)
NAPERVILLE, Illinois - Speculators sold significantly more Chicago corn than expected last week, establishing their first bearish stance on the yellow grain in nearly seven months.
However, funds' massive CBOT soybean meal short combined with their building bullish soybean oil bets left them with record oil optimism in relation to meal.
CBOT July corn hit seven-month lows in the week ended May 13, easing nearly 3%. U.S. corn planting has been moving along without a hitch, and funds were expected to have gotten short heading into last Monday's reports from the U.S. Department of Agriculture.
They certainly emerged as bears from that data release, which placed 2025-26 U.S. corn supplies well below analysts' expectations but up 27% from the current year.
In the week ended May 13, money managers were net sellers of nearly 99,000 CBOT corn futures and options contracts, resulting in a net short of 84,976 contracts. That is their first net short in corn and their most bearish view since October.
That is a stark contrast from early February, when funds' net long hit a three-year high of 364,217 contracts. They have been net sellers of corn in 12 of the 14 weeks since, largely driven by U.S. trade policy jitters and the anticipation of a record U.S. corn crop.
July corn futures remained steady at the end of last week, but December futures on Friday sank to five-month lows.
Money managers extended their net short in CBOT wheat futures and options through May 13 to 126,895 contracts, nearly their most bearish wheat view in more than seven years.
Most-active CBOT wheat futures on May 13 sank to their lowest levels since August 2020 as USDA pegged global wheat supplies to rise slightly into 2026 from the current levels. July wheat futures rose 1.5% over the last three sessions as U.S. wheat exporters made some of their largest sales in years, but traders have also noted improving U.S. crop conditions.
SOYBEANS AND PRODUCTS
In the week ended May 13, money managers extended their net long in CBOT soybean oil futures and options to a six-month high of 67,432 contracts, up nearly 11,000 on the week.
Most-active futures rose 6.5% on the week before reaching 18-month highs on Wednesday, driven by U.S. lawmakers' proposed extension of the clean fuel tax credit (45Z) through 2031.
However, futures plunged 6.5% over the last two sessions including a limit-down move on Thursday, when rumors circulated that next year's target for U.S. renewable diesel volumes could be much lower than previously expected.
In the background, trade disparities in soybean product trade had been on the rise. CBOT oilshare, which measures soyoil's share of value in the soy products, recently hit the highest levels since late 2022.
But speculators' bullishness in the oilshare last week reached an all-time high, possibly suggesting one or both of their product positions have been too extreme.
In the week ended May 13, money managers slightly trimmed their 100,000-contract-plus net short in CBOT soybean meal futures and options from the previous week's record high.
But that was offset by funds' net buying in soyoil, boosting their net long in the CBOT oilshare to 170,177 contracts. The pre-2025 high was 144,631.
CBOT soybeans both in the week ended May 13 and in the following sessions moved directionally with soybean oil. Money managers extended their net long in CBOT soybean futures and options to a three-month high of 38,407 contracts through May 13, up more than 16,000 on the week.
Traders in the week ahead will be watching U.S. weather forecasts for the early establishment of the corn and soybean crops.
But they also must keep a close eye on any potential developments out of Washington, especially pertaining to trade policy or biofuel mandates, both of which have recently jolted futures markets.
Karen Braun is a market analyst for Reuters. Views expressed above are her own.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The National
7 hours ago
- The National
US rate cuts could come as soon as July, Fed official says
A senior official at the Federal Reserve has suggested that the US central bank should consider cutting interest rates as soon as next month. 'We could do this as early as July,' Fed Governor Christopher Waller said on CNBC. 'That would be my view, whether the committee would go along with it or not.' As a governor on the Federal Reserve Board, Mr Waller holds a permanent vote on the central bank's rate-setting Federal Open Market Committee. Mr Waller and other Fed officials unanimously voted to hold interest rates steady between 4.25 and 4.50 per cent on Wednesday. The Central Bank of the UAE, which follows Fed decisions because of the dollar peg, also held rates steady following the US central bank's decision. Fed officials this week also maintained their forecast for two quarter-point cuts this year before slowing the pace of cuts in 2026. Several officials projected zero rate cuts, pointing to some uncertainty on the future policy path. The central bank has not adjusted interest rates in its last four meetings, largely due to the uncertainty surrounding tariffs. But Mr Waller said the Fed can 'look through' their inflation impact, arguing tariffs would create a one-time inflation bump rather than persistent high prices. Fed Chair Jerome Powell on Wednesday said tariffs could either have a one-off or persistent effect on inflation. Asked by reporters why not cut interest rates this month, Mr Powell said he expected to see 'meaningful' inflation in the coming months. Data shows that the Fed's preferred inflation metric has decelerated for three consecutive months. The PCE (Personal Consumption Expenditures) Price Index rose 2.1 per cent annually last month, one-tenth of a percentage point above the Fed's long-term target. 'The data the last few months has been showing that trend inflation is looking pretty good,' Mr Waller said. He suggested that, if the Fed were to begin cutting rates in July, it should begin slowly. 'But start the process,' Mr Waller suggested. 'That's the key thing. And then if there's some big shock due to maybe the Middle East conflict, we can pause.' Mr Waller added that he is also concerned about the jobs market. While the unemployment rate has remained stable at around 4.2 per cent, Mr Waller said he was concerned about fewer jobs being created. The four-week average of jobless claims is at its highest level since August 2023, according to data from the Labour Department. 'Why do we want to wait until we actually see it crash before we start cutting rates?' he added. 'So I'm all in favour of saying maybe we should start thinking about cutting the policy rate at the next meeting, because we don't want to wait till the job market tanks before we start cutting the policy rate.' The Fed holds its next two-day meeting from July 29 to 30.
Zawya
8 hours ago
- Zawya
Audi could build plant in US to placate Trump, Spiegel reports
Volkswagen's premium brand Audi could build a plant at a new location in the United States under scenarios being considered to placate President Donald Trump in the tariff conflict, the Spiegel news magazine reported on Friday. Audi is considering building a plant in the southern U.S., which would be the more expensive option out of a number of scenarios being considered, with company sources estimating costs of up to 4 billion euros ($4.6 billion), the report said. An Audi spokesperson said that the company aims to build up more of a presence in the United States. "We are currently examining various scenarios for this. We are confident that we will make a decision this year in consultation with the (Volkswagen) group on how this will look in concrete terms," she said in an emailed statement, reaffirming earlier comments made by the company. Audi has no production of its own in the U.S., but Volkswagen has a plant in Chattanooga, Tennessee and one under construction near Columbia, South Carolina. Trump's announcement of sweeping tariffs has already racked up hundreds of millions of euros in costs for German carmakers heavily reliant on their export business, according to an industry representative. BMW, Mercedes-Benz and Volkswagen are in talks with Washington over a possible import tariff deal , seeking to use their U.S. investments and exports as leverage to soften any blow, sources have told Reuters. ($1 = 0.8678 euros)
Zawya
9 hours ago
- Zawya
Wall St futures edge lower as Middle East war enters second week
Wall Street stock index futures edged lower on Friday as investors assessed comments on U.S. military involvement in the Middle East conflict, and Federal Reserve Chair Jerome Powell's warning on rising inflation ahead. As the fatal aerial war between Israel and Iran approached its second week, the White House said on Thursday President Donald Trump will decide in the next two weeks whether the U.S. will get involved on Israel's side. "While the immediate prospect of a U.S. intervention in Iran may have diminished, the fact this is reportedly a two-week hiatus means it will remain a live issue for the markets going into next week," Dan Coatsworth, investment analyst at AJ Bell, said in an email. The oil price volatility triggered by the Middle East conflict has also added on to concerns around tariff-based price pressures in the United States. The Fed, expected to balance the risk of slowing growth and higher inflation, kept interest rates unchanged on Wednesday, in line with market expectations. Policymakers, however, cautioned about inflation picking up pace over the summer as the economic effects of steep import tariffs kick in. Money market moves show traders are pricing in about 47 basis points of rate cuts by the end of 2025, with a 59% chance of a 25-bps rate cut in September, according to CME Group's FedWatch tool. At 05:37 a.m. ET, Dow E-minis were down 105 points, or 0.25%, S&P 500 E-minis were down 16.75 points, or 0.28%, and Nasdaq 100 E-minis were down 67.5 points, or 0.31% The S&P 500 and the Nasdaq are set for weekly gains, while the blue-chip Dow is on track for mild weekly declines. Crypto stocks rose in premarket trade as bitcoin prices soared nearly 2%. Coinbase Global was up 1.8%, and Strategy gained 1.1%. Shares of Tesla gained 1.2% among megacap stocks. Supermarket operator Kroger Co gained nearly 1% ahead of quarterly results due before the opening bell. Stablecoin issuer Circle extended gains from its previous session, with shares last up 12.6%. Wall Street's strong gains last month, primarily driven by a softening in Trump's trade stance and strength in corporate earnings, had pushed the benchmark S&P 500 index close to its record peaks before the ongoing conflict in the Middle East made investors risk-averse. The S&P 500 index stood nearly 3% below its record level, and the tech-heavy Nasdaq remained 3.3% lower. Philadelphia Fed business outlook data for June is scheduled at 08:30 a.m. ET. (Reporting by Kanchana Chakravarty in Bengaluru; Editing by Devika Syamnath)
