Managed Money Goes Long Corn as Weather Worries Bite

February 26th, 2018


Category: Grains, Weather

(AgriCensus) –  Managed money positions in options and futures in the week ending February 20 have moved into a net long position on corn for the first time since August 2017, according to commitment of traders data published Friday by the CFTC.

Soybeans have also pressed deeper into the net long position established in the week ending February 13, while wheat shows sign of doubt as net short positions increased on soft red winter, and the net long position reduced on hard red winter, the data showed.

Corn – net long 18,674

The biggest move came from corn, which saw traders respond to good demand for US corn and deepening concern around the health of Argentina’s corn crop with a modest 3% increase in long positions to 266,270 lots.

The damage was done, however, through a near 9% reduction in the short positions, taking the total to 247,596 lots with open interest also picking up 23,765 new contracts to consolidate at 2.12 million.

Over the course of the week to February 20, the front month corn futures contract lost 2 cents/bushel to settle on February 20 at $3.6550/bu.

In the latest data available since February 20, the contract was trading around $3.68/bu at time of writing, February 26.

Wheat – net short 67,039 (SRW), net long 13,141 (HRW)

Wheat, which led the move into net length on February 6 when HRW positions reversed, showed further signs of waning bullish signals.

A 10,000 lot increase in short positions on SRW deepened the net short, while a minor 490 lot decrease in the long positions on HRW was augmented by a 1,000 contract build on short positions.

Prices have slumped on the Chicago SRW wheat contract, falling just under 6 cents/bu on the front month March contract to close out on February 20 at $4.4925/bu, before rallying through to February 26 to trade around $4.5675/bu.

Soybeans – net long 99,111

A strongly constructive picture for soybeans continued to propel the complex as a near 30,000-contract build in long positions and a halving of the short position more than doubled the net long position.

Longs gained 23% to 124,578 while the short positions reduced from 53,907 lots to 25,467 lots, according to the CFTC.

The move came as further evidence emerged of the likely damage that a pronounced and prolonged dry spell is having on the health of Argentina and Brazil’s soybean crop, with fresh on-the-ground data seeing the size of both Argentina and Brazil’s soybean crop revised downwards.

In the week through to February 20, the front month March contract rose from $10.1725/bu to $10.2650/bu, with further support pushing beans to trade at $10.43/bu by the morning of February 26.

Mounting evidence suggests that any rains now are already ‘too little, too late’ and that South American crops have suffered irreversible damage.


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