Karen Braun

FORT COLLINS, Colo.- Smaller-than-expected supplies forecast by the U.S. government earlier this month helped extend speculators’ buying streak across Chicago grains and oilseeds, but sinking prices since then have gone against those bets and the enthusiasm may be on the decline.

Last week was the first since December that money managers were net buyers across the board. Their overall net long combining CBOT corn, wheat, soybeans and products, and Kansas City and Minneapolis wheat reached 558,686 futures and options contracts as of Aug. 17. 

That compares with the recent minimum of 364,216 contracts on July 13, but it is well off the highs of more than 800,000 contracts at the beginning of this year.

Open interest for corn and soybeans is far below the January and February levels, which were anomalously high for any time of year, but it is now closer to average for the date. CBOT wheat open interest remains below average, though it has jumped 20% since early July. Trading volumes continue to be modest for all three.

In the week ended Aug. 17, money managers increased their net long in CBOT corn futures and options to 278,911 contracts from 254,044 a week earlier, based on data published Friday by the U.S. Commodity Futures Trading Commission.

Funds raised their net long in CBOT soybean futures and options to 97,179 contracts from 91,648 in the prior week. Their new soybean stance was the most bullish since mid-June and for corn it is their most optimistic since June 1.

PRICE DECLINES

Futures have fallen significantly since the U.S. Department of Agriculture’s Aug. 12 report, which had caused a surge in prices as U.S. and global crops came in smaller than predicted. Markets were hit particularly hard on Friday as U.S. biofuel blending mandates are likely to fall short of expectations this year. 

Some analysts believe USDA’s corn and soybean yields could be too light. Rain fell in parts of the parched northwestern U.S. Corn Belt over the weekend, and more rain in the forecast for those areas may help crops finish better than expected.

Advisory service Pro Farmer on Friday pegged U.S. corn yield at a record 177 bushels per acre, above USDA’s 174.6 bpa following a seven-state crop tour. urn:newsml:reuters.com:*:nL1N2PR128 Soybean yield was estimated at 51.2 bpa, above USDA’s 50.

Pro Farmer has overshot final corn and soybean yields in two of the last three Augusts, but before that there had been a long streak of underestimating.

Friday’s close in December corn was about 6% lower than on Aug. 12, and November soybeans SX1 were about 4% lower. Corn on Friday reached its lowest point since July 26 and soybeans the lowest since June 28.

Commodity funds were seen as heavy sellers of CBOT corn and soybean futures on Thursday and Friday with trade estimates greater than 30,000 contracts each. 

SOY PRODUCTS AND WHEAT

News about lower U.S. biofuel blending mandates hit soybean oil futures BOv1 especially hard, as they were down nearly 9% in the last three sessions. The most-active contract on Friday hit its lowest point since June 21.

But futures had been up more than 2% through Aug. 17, and money managers increased their net long in CBOT soybean oil futures and options to 69,095 from 63,542 in the previous week, establishing their most bullish stance since early June.

They also raised their net long in soybean meal futures and options, which was up about 2,500 contracts to 27,740 as of Aug. 17, their most optimistic since mid-May. Most-active soybean meal futures SMv1 fell 2.2% between Wednesday and Friday.

The tightening of global wheat supplies has recently supported prices. Earlier this month, USDA slashed top exporter Russia’s harvest by 15%, far more than expected. Shrinking supplies in the United States, Canada and Europe have also pressured wheat markets.

In the week ended Aug. 17, money managers expanded their net long in CBOT wheat futures and options to 24,185 contracts from 19,127 a week earlier. That marked their most bullish position since early March.

Funds’ Kansas City wheat net long as of Aug. 17 at 46,548 contracts is also their most bullish since early March and up nearly 2,000 contracts on the week. They added more than 3,000 futures and options contracts to their Minneapolis net long, which reached 15,028 contracts, the highest since mid-June.

At Friday’s close, CBOT wheat Wv1 was down more than 3% since Aug. 12. K.C. wheat KWv1 had fallen nearly 5% and Minneapolis futures MWEZ1 were off almost 2%.

Karen Braun

(Editing by Diane Craft) ((karen.braun@thomsonreuters.com; Twitter: @kannbwx))