Funds play 'wait and see' on CBOT corn, soy ahead of U.S. yield data -Braun

Corn open interest has fallen more than 20% since mid-June

  
A school of fish swim above a staghorn (Acropora cervicornis) coral colony as it grows on the Great Barrier Reef off the coast of Cairns, Australia October 25, 2019.

A school of fish swim above a staghorn (Acropora cervicornis) coral colony as it grows on the Great Barrier Reef off the coast of Cairns, Australia October 25, 2019.

REUTERS/Lucas Jackson

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

FORT COLLINS, Colo.- Grain markets have recently been quieter than they have been for much of this year, but speculators are now looking ahead to the U.S. corn and soybean yield forecasts due on Aug. 12 from the Department of Agriculture.

That report has delivered big surprises in the past, so unless there are demand developments or a major shift in the weather forecast, investors might be hesitant to make position adjustments ahead of time.

In the week ended July 27, money managers increased their net long position in CBOT corn futures and options to 228,009 contracts from 223,302 a week before based on data from the U.S. Commodity Futures Trading Commission. 

Although it was a small change, that marked funds’ first back-to-back weeks of net buying in corn since late March, just before U.S. planting intentions. December corn futures are 20% higher than they were in late March but almost 15% off May’s contract high.

However, corn open interest has fallen more than 20% since mid-June after being at or near all-time highs for the first few months of the year, and that decline is more dramatic compared with other years. Open interest was down 4% in the week ended July 27 to the lowest levels since October.

The same trend is true in soybeans, as open interest lost 8% through July 27, reaching the lowest point since January 2020 but maintaining mostly average levels for the time of year.

CBOT wheat open interest remains at a 12-year low for the date. Additionally, July trading volumes for corn, soybeans and wheat were lower than in previous years.

Money managers trimmed their net long in soybean futures and options through July 27 by less than 2,000 contracts, dropping it to 94,051 contracts. But they flipped to a net long in CBOT wheat of 3,067 futures and options contracts from a net short of 3,770 a week earlier. 

CBOT wheat futures WU1 jumped more than 4% over the last three sessions as drought continues to batter wheat in the northern U.S. Plains. A crop tour through top spring wheat producer North Dakota last week found the worst yield potential since the tour began in 1993. 

The state of the spring wheat crop has traders wary of corn and soybean potential in the northern United States and other areas that were too dry last month. But rains moving through Iowa on Friday along with the potential for some additional weekend moisture to other parts of the Corn Belt offered some yield optimism.

Corn CZ1 and soybean futures fell fractionally between Wednesday and Friday as drier U.S. forecasts in the longer range were offset by demand concerns. Recent U.S. corn and soybean export sales have been below average, and top buyer China has been quiet.

Karen Braun

(Editing by Matthew Lewis) ((karen.braun@thomsonreuters.com; Twitter: @kannbwx))