CHICAGO (Reuters) – Speculators were pegged last week by trade sources as net buyers of Chicago-traded corn, soybeans and wheat, but their corn views did not budge, and they were instead net sellers of soy and wheat.
Despite a drop in exportable wheat supply worldwide, U.S. exporters have yet to cash in on the deal and total sales for the current marketing year sit at a nine-year low.
Investors have adopted the most bearish stance toward CBOT soybeans since late January, as the ongoing trade war between the United States and the largest soybean buyer, China, continues to be the primary anchor on the market.
In the week ended Sept. 4, hedge funds and other money managers extended their net short position in soybean futures and options to 62,749 contracts from 53,642 in the previous week, according to data from the U.S. Commodity Futures Trading Commission. (tmsnrt.rs/2NXn3cE)
Chinese bookings for U.S. soybeans in the 2018-19 marketing year that began on Sept. 1 stand at a 13-year low, and the domestic harvest is likely to comfortably exceed records.
Traders are now bracing for the U.S. Department of Agriculture’s monthly supply and demand report due on Wednesday at noon EDT (1600 GMT). They expect the agency to place U.S. soybean yield at a record 52.2 bushels per acre and U.S. ending stocks at a burdensome 830 million bushels, above last month’s 785 million.
Trade sources suggest that commodity funds were slight net buyers of soybeans between Wednesday and Friday.
Selling dominated the soy products through Sept. 4. Money managers cut their net long in soybean meal futures and options to 21,401 contracts from 27,449 a week prior. This marks funds’ least-bullish meal view since mid-January, but market estimates peg commodity funds as net buyers of meal over the last three sessions.
The managed-money soybean oil short continues to linger at historically bearish levels, increasing to 88,029 futures and options contracts through Sept. 4 from the previous week’s 86,485. Funds were likely net sellers of soyoil between Wednesday and Friday.
In CBOT corn futures and options, money managers’ net short position stood at 56,884 contracts through Sept. 4, just 73 fewer contracts than in the previous week. Funds are notably less bearish toward the yellow grain than at the same point in the previous two years. (tmsnrt.rs/2NXDDca)
The lack of buying interest last week came despite a 3.4 percent rise in December futures during the four-day period, the contract’s largest such gain in a month. Support came from robust U.S. exports, a new tax regime in key supplier Argentina that may cut next year’s corn plantings, and torrential rains across the U.S. Midwest that may push back harvest and potentially affect yields.
Analysts expect USDA to place U.S. corn yield at 177.8 bushels per acre, below its August estimate of 178.4, but still above last year’s record. U.S. ending stocks are seen falling slightly to 1.639 billion bushels from last month’s 1.684 billion.
Trade sources predict that commodity funds were net buyers of corn over the last three sessions, though to a very mild degree.
Between July 24 and Sept. 4, commodity index traders reduced the total amount of outright positions in corn futures and options by 27 percent, but the Sept. 4 figure of 532,154 contracts is elevated compared with historical levels. (tmsnrt.rs/2NXEObA)
In the week ended Sept. 4, money managers cut bullish bets in Chicago wheat futures and options to 42,766 contracts from 51,180 in the previous week, and this was against trade predictions that they were buyers during the period.
CBOT wheat futures received a boost in the final days of August amid speculation that top supplier Russia may restrict shipments or impose an export duty, but those rumors were put to rest last Monday by the country’s Agriculture Ministry.
Funds’ reaction to the Russian news and subsequent selling activity on Tuesday, when trading resumed after the U.S. holiday, was likely underestimated. A ministry official confirmed on Thursday that Russia has no plan to impose a tax on wheat exports.
Through Sept. 4, money managers trimmed their net long position in Kansas City wheat futures and options to 55,254 contracts from 61,460 in the prior week. They also slashed their net long in Minneapolis wheat futures and options to 976 contracts from 2,565 a week earlier.
December futures fell to a seven-week low on Friday amid weak demand for U.S. wheat. Word that a near-record harvest is likely in Western Australia, which produces half of that country’s primarily exported crop, also tempered the wheat market on Friday.
Trade sources suggest that commodity funds were straight sellers of wheat contracts between Wednesday and Friday. However, the managed-money positions in the winter wheat contracts were highly elevated at the start of September relative to past years. (tmsnrt.rs/2NU2OfO)
Editing by Matthew Lewis