Investor optimism in Chicago-traded corn fizzled just in time for the Thanksgiving holiday, which coincided with general pessimism across the board for CBOT grain and oilseed futures. The overall negativity continued in the days after, except for in the wheat market.
In the week ended November 20, hedge funds and other money managers flipped to a net short position in CBOT corn futures and options of 7,845 contracts according to data from the US Commodity Futures Trading Commission. This compares with a net long of 17,981 contracts in the previous week, ending funds' five-week stint in bullish territory.
Money managers also sold soyabean futures and options through November 20, extending their net short to 60,246 contracts from 55,025 in the previous week. They virtually erased their bullish view in CBOT soyabean meal futures and options, which stood at just 874 contracts as of November 20. That compares with 2,035 contracts a week earlier and 19,521 contracts two weeks earlier. Funds have not been bearish in meal since September 2017, but they are very likely bearish heading into Tuesday's trade.
Conversely, speculators have been pessimistic toward soyabean oil since mid-January. In the most recent week, money managers expanded their net short in bean oil to 79,245 futures and options contracts from 70,156 a week prior. The selling trend in CBOT corn, soyabeans and soya products continued over the last three sessions, particularly on Monday, driven by weakness in the soya complex.
CBOT January soyabeans plunged 2 percent on Monday over worries that the faltering US export campaign may not recover. Soyabean futures fell below key technical levels, which also triggered selling. Market tension has been rising over the much-anticipated meeting between US President Donald Trump and Chinese President Xi Jinping on the sidelines of a G20 summit in Argentina this week. The trade war between the two countries has halted US soyabean shipments to China, the world's top buyer.
Late on Monday, it was reported that if the negotiations were unsuccessful, Trump would slap an additional $267 billion worth of tariffs on Chinese goods, which would cover the entirety of imports from the East Asian country. The soyabean market also faced other hurdles on Monday. The US Department of Agriculture reported that 1.1 million tonnes of soyabeans were inspected for export in the week ended November 22, at the high end of trade expectations but well below previous years' levels.
It was also reported that lead supplier Brazil may start to harvest soyabeans within a month's time, which would mean less wait time for China to receive supplies. The Brazilian real also weakened nearly 3 percent on Monday, making it more attractive for Brazilian farmers to market their supplies internationally.
Soyabean oil futures hit across-the-board contract lows on Monday. This was likely linked with Monday's dive in Malaysian palm oil futures, which notched their biggest fall in more than 21 months after top producer Indonesia axed its export duty in order to increase shipments.
Money managers extended their net short in CBOT wheat futures and options through November 20 to 37,848 contracts from 26,684 in the previous week. However, they have been net buyers in the three sessions since, largely hoping that demand for US wheat will soon pick up.
Much of this hope hinges on a tightening of supplies in top wheat exporter Russia that should eventually slow its record shipping pace. As of November 22, the country had shipped 19.8 million tonnes of wheat since July 1, up 27 percent over the same period a year ago.
The idea of slowed Black Sea wheat exports was reinforced on Sunday when Russia seized three Ukrainian naval ships in the Azov Sea, which hosts two Ukrainian grain ports. However, analyst APK-Inform said on Monday that those commercial ports were operating normally.
Russia's agriculture safety watchdog said last week that operations at a loading station in the port of Novorossiysk would be suspended for one month on phytosanitary violations, but this was also not expected to impact the overall grain shipping pace.
Wheat traders were encouraged by USDA's Friday announcement of a 120,000-tonne sale of US soft red winter wheat to Egypt. However, US export inspections of wheat for the week ended November 22 totalled 252,489 tonnes. This was below the trade range of expectations and the smallest weekly total of the 2018-19 marketing year so far.
Commodity index traders' recent activity in the CBOT wheat market has been more noteworthy than that of managed money. The total number of CBOT wheat contracts held by index traders surged late last month, reaching a record 330,525 contracts in the week ended October 30. This included 224,677 total long positions, the most since November 2012, and an all-time high of 105,848 total short positions.
Those numbers fell drastically in the middle weeks of this month, though. As of November 20, index traders held a total of 254,324 CBOT wheat futures and options contracts composed of 187,811 longs and 66,513 shorts. Through November 20, money managers increased their net short in Kansas City wheat futures and options to 5,214 contracts from 1,271 in the previous week. This was the second consecutive week that funds were bearish toward K.C. wheat after having maintained bullish views since early February.
Investors remained pessimistic on Minneapolis wheat futures and options through November 20, increasing their net short to 6,601 contracts from 5,877 a week earlier.
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