Funds sell corn and soybeans despite record U.S. export sales -Braun

The expanding supply outlooks for corn and soybeans have offset incredibly strong export demand for the upcoming marketing year

  
Image used for illustrative purpose. Soy beans are seen at a Grobocopatel Hermanos company storage plant in Carlos Casares, Argentina April 16, 2018. Picture taken April 16, 2018.

Image used for illustrative purpose. Soy beans are seen at a Grobocopatel Hermanos company storage plant in Carlos Casares, Argentina April 16, 2018. Picture taken April 16, 2018.

REUTERS/Agustin Marcarian

(The opinions expressed here are those of the author, a market analyst for Reuters.)

FORT COLLINS, Colo. - Speculators are approaching the one-year mark of the last time they were bullish toward Chicago-traded corn, and that trend is unlikely to end anytime soon as favorable U.S. growing conditions keep stockpiles generous.

The expanding supply outlooks for corn and soybeans have offset incredibly strong export demand for the upcoming marketing year. Combined U.S. corn and bean export sales for the new year are record-large, and just over half the total is destined for China.

Money managers extended their net short position in CBOT corn futures and options to 172,820 contracts through Aug. 4 from 143,280 a week prior, based on data from the U.S. Commodity Futures Trading Commission.  

That was their heaviest corn selling week since late May. New shorts led most of the move, but funds also added outright longs last week, and those are the most plentiful since mid-March.  

Mid-August 2019 was the last time money managers were net long corn, and the subsequent selloff was sparked by incorrect expectations for a bullish crop report from the U.S. government.

That same report from the U.S. Department of Agriculture is due Wednesday, but the trade predictions are bearish. Analysts see U.S. corn yield at a record 180.5 bushels per acre and next year’s ending stocks at 2.8 billion bushels, up nearly 7% from USDA’s July figure.  

U.S. corn and soybeans have mostly enjoyed good weather during this growing season, and the forecast for the next couple of weeks is nonthreatening. The average trade guess for soybean yield is 51.2 bushels per acre, just 0.7 bpa off the record, and that is seen sending next year’s carryout to 524 million bushels, up 23% from the July peg.

In the week ended Aug. 4, money managers cut their net long in CBOT soybean futures and options to 44,219 contracts from 62,161 a week earlier. That was primarily driven by the removal of gross longs.  

December corn futures CZ0 closed near the contract low on Friday, and November soybeans SX0 finished at their lowest point in more than a month. Commodity funds likely continued selling corn and soybeans late last week. 

China kept up its buying streak between Wednesday and Friday, purchasing at least 774,000 tonnes of U.S. soybeans to be delivered in 2020-21, which begins on Sept. 1.  

SOY PRODUCTS AND WHEAT

CBOT soybean oil futures BOv1 were up nearly 4% in the week ended Aug. 4, and money managers increased their net long to 48,333 futures and options contracts from 37,549 a week earlier.

That move was largely on the addition of outright longs, and those are the second-most plentiful for the time of year, behind 2017. Soyoil futures remain near five-month highs, though they fell 1% over the last three sessions.

Funds’ soybean meal short was little changed at 20,985 futures and options contracts, up 1,521 from the previous week. Soymeal futures hit contract lows on Friday.

Money managers’ views toward CBOT wheat also barely moved through Aug. 4, falling by 521 futures and options contracts to a net long of 1,178. That was the result of both new longs and shorts.

However, trade estimates suggest investors are back in bear territory to start the new week, with the three-session selling peg at 10,000 futures contracts. CBOT wheat Wv1 fell 2.5% between Wednesday and Friday, ending the week below $5 per bushel for the first time in a month.

Rising supplies are also a concern for wheat traders, as USDA is expected to slightly increase U.S. stocks. World ending stocks are seen falling from the July forecast, but they would still reach record levels by mid-2021. 

Funds raised bearish bets in Kansas City wheat futures and options to 25,811 contracts through Aug. 4 from 19,026 a week earlier. They also upped their Minneapolis short to 22,000 contracts from 21,125 in the prior week, and that was their sixth consecutive week of selling in spring wheat.

(The opinions expressed here are those of the author, a market analyst for Reuters.)

(Editing by Matthew Lewis) ((karen.braun@thomsonreuters.com; +1 (312) 408-8059; Reuters Messaging: karen.braun.thomsonreuters.net@reuters.com; Twitter: @kannbwx))

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