Supply uncertainties pare funds’ CBOT soy, corn bearishness to four-month low- Braun
The opinions expressed here are those of the author, a market analyst for Reuters.
By Karen Braun
NAPERVILLE, Illinois, Sept 29 (Reuters) -After months of unusually pessimistic sentiment, speculators’ bearish bets across Chicago soybeans and corn have finally pulled in line with other recent supply-heavy years, just ahead of a pivotal data release from the U.S. government.
Notable short covering in soybeans most recently led this effort.
In the week ended Sept. 24, money managers slashed their net short position in CBOT soybean futures and options to 74,978 contracts from 122,415 a week earlier, establishing their least bearish stance since early June.
That marked funds’ fifth consecutive week of short covering in beans with the heaviest action occurring in the most recent week. A quarter of the latest move was driven by new gross longs, the most for any week in nearly five months.
This shift in what had been record bearish soybean sentiment has been sparked by historic drought across Brazil’s top producing states, just as farmers there are beginning to sow the crop. Recent dryness across the United States also has traders wondering if the huge yield predictions can hold.
Those concerns sent CBOT November soybeans SX24 to two-month highs on Friday, and that followed 3.6% gains in the week ended Sept. 24.
CBOT soybean oil BOv1 surged nearly 9% in that week, and soybean meal SMv1 rose more than 1%. That was associated with huge speculative short covering in soyoil, though new long positions were more prominent in soybean meal.
Through Sept. 24, money managers’ net short in CBOT soyoil futures and options fell to a 10-week low of 18,856 contracts, down almost 32,000 on the week. It has been nearly a year since funds held a consistently bullish view in soybean oil.
But they have been in bull territory with soybean meal since April, and they boosted their net long to an 11-week high of 58,259 futures and options contracts as of Sept. 24. That is identical to funds’ year-ago stance.
Along with beans, strength in meal continued on Friday with a 5% jump in futures, the most-active contract’s biggest single-session gain in more than a year. Prices reached three-month highs during the session.
Soyoil has recently been supported by gains in rival global vegetable oils, but the contract slipped late last week after having posted two-month highs.
WEEK AHEAD
CBOT corn and wheat futures were fractionally changed in the week ended Sept. 24, and speculators made slight modifications to their positions. They added about 1,400 contracts to their wheat net short, which reached 26,469 futures and options contracts.
They trimmed their net short in CBOT corn by around 4,100 contracts, and the resulting 130,699 futures and options contracts is funds’ least bearish corn view in four months. Investors pulled both longs and shorts from their corn stance, potentially in preparation for Monday’s often-unpredictable data from the U.S. Department of Agriculture.
The data will feature U.S. quarterly stocks as of Sept. 1, which represent the 2023-24 marketing year-end supplies for corn and soybeans. Corn ending stock estimates have been whittled over the last few months, sometimes against expectations, and that has some analysts fearing a bearish report.
Beyond the USDA figures, traders will be watching for U.S. harvest progress as well as planting and weather in Brazil. As of Sunday, forecasts continued to show that ample rains may be more than a week out for Brazil’s top soy and corn state, potentially maintaining planting concerns.
Karen Braun is a market analyst for Reuters. Views expressed above are her own.
Graphic- Money managers' combined net position in CBOT corn and soybeans https://tmsnrt.rs/3N6rqT2
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