Funds' bearish sentiment on US grains and oilseeds hits nine-month high: Braun
(The opinions expressed here are those of the author, a market analyst for Reuters.)
NAPERVILLE, Illinois - Speculators dug deeper into bear territory last week across U.S. grain and oilseed futures, and with this time of year known to feature plenty of uncertainties, investors must keep their eyes glued on upcoming weather forecasts for the U.S. Corn Belt.
In the week ended June 3, money managers' combined net short position across U.S. grain and oilseed futures and options surpassed 400,000 contracts, up more than 90,000 on the week.
That marks their most bearish collective position since early September and their most bearish open to June in eight years. Just four months ago, the combined net long topped out at 300,000 contracts.
Last week's move was driven by heavier selling in corn, soybeans and soybean oil. Money managers maintained bullish CBOT soybean oil bets through the week ended June 3, but they slashed their net long futures and options contracts by 22,000 to 31,990 contracts due to negative sentiment on the U.S. biofuels front.
Money managers nearly erased bullish bets in CBOT soybean futures and options, reducing their net long to 8,601 contracts from 36,697 a week earlier. Funds' bearish soymeal position remained near-record large as prices have traded sideways over the last several weeks, and they also maintained sizable net shorts across the wheat flavors.
CORN FOCUS
Last week's net selling in corn was primarily driven by a large wave of new gross short positions, a trend that has been present in six of the last seven weeks. As of June 3, money managers' net short in CBOT corn futures and options hit a nine-month high of 154,043 contracts, up from 100,760 a week earlier.
Recent heavy speculative selling in corn comes against the backdrop of a wildly strong U.S. export program and similarly robust U.S. ethanol grind. These factors have pared 2024-25 U.S. corn ending stock predictions significantly over the last year.
However, the futures market does not seem to be reflecting a terribly tight situation. Late last week, CBOT July corn opened up a discount to December corn, not suggestive of imminent concern over supplies.
Funds' building bearishness in corn as well as the newly established market carry could be hinting at the expectation that last year's U.S. corn crop was larger than the U.S. Department of Agriculture stated. The agency's June 30 stocks report could potentially validate this notion.
But in the meantime, traders will need to be watching the U.S. weather forecasts, which as of Friday suggested a potential dry spell for the western Corn Belt over the next two weeks. Heat risks were relatively low, though corn and soybean crop conditions are sitting at just average levels.
In the week ahead, the market will be anticipating USDA's monthly supply and demand report on Thursday, and traders expect a further contraction in old-crop U.S. corn supply.
All eyes will turn toward London on Monday, where top U.S. and Chinese officials will hold talks aimed at resolving trade disputes. Pending the outcome, this could have markets starting off the week with a bang.
But whether that trajectory is higher or lower is anyone's guess.
Karen Braun is a market analyst for Reuters. Views expressed above are her own.
(Writing by Karen Braun; Editing by Edwina Gibbs)
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