Money managers recorded their most bearish-ever close to October in both Chicago corn and K.C. wheat futures and options, while the Chicago wheat net short has tied with last year's record. In the week ended October 31, collective pessimism in CBOT grains grew to the second highest levels of the year behind the last full week in April, which was an all-time record.
Large supplies continue to hang over the grain markets, and specs fear that corn inventory will expand even further when the US Department of Agriculture revises its peg of the domestic crop later this week. Money managers increased their net short position in CBOT corn futures and options to 202,763 contracts in the week ended October 31, according to data from the US Commodity Futures Trading Commission.
This compares with the spec net short of 174,394 contracts a week earlier, and the new stance is the most bearish funds have been during this week. The bears are firmly in control as the outright managed money short has reached the third-largest value ever at 396,721 contracts. This short stance bottomed out for the season at the end of July with 138,876 contracts, and the number of shorts has been swelling since.
But the outright corn longs have not moved much - fluctuating around the 210,000-contract mark for just over two months now - meaning that the shorts have driven the plunge in net speculative views. (http://reut.rs/2habJP1) Funds have not drastically shed corn shorts in the days since as trade sources suggest they were miild net buyers late last week Money managers have a large build-up in positions on both sides of the Chicago wheat market, but the shorts are winning out as the bearish stance slid to 110,875 futures and options contracts from 83,965 a week prior.
Market open interest in CBOT wheat reached a record high of 581,134 contracts on Thursday, reflecting the vast amount of shorts and longs in the mix. Futures bounced Thursday on short-covering after hitting contract lows a couple days earlier, and as a result funds have likely bought back some of their Chicago wheat short over the latest three sessions.
For the sixteenth week in a row, money managers' sentiment toward K.C. wheat was on the downtrend. They lengthened their bearish stance to 21,393 futures and options contracts from 10,840 in the prior week, and the new net position is record short for the time of year. Speculators upped confidence in Minneapolis wheat futures and options for the first time in nine weeks as the managed money net long grew to 3,329 contracts from 2,627 in the previous week.
The bulls still dominate the CBOT soyabean market, but they lost ground in the last week of October. Money managers cut their net long position in CBOT soyabean futures and options to 40,612 contracts from 49,246 in the prior week. In the same week last year, funds were net long 110,613 contracts and trending upward. Optimism over US exports and the expectations of a trim to the US crop, along with technical buying, boosted benchmark January futures late last week.
But as Brazil's currency weakened on Friday to the lowest levels in four months, fears that this would make the US product less attractive to foreign buyers erased most of Wednesday's and Thursday's gains, meaning funds were unlikely to have drastically altered views late last week. This same factor pressured corn on Friday, too.
Bullish bets in soyabean oil futures and options continued to expand last week as the managed money net long pushed to 44,050 contracts from 35,613 in the week before, owing primarily to short-covering. But soyabean meal got a down-vote from fund managers, and their mild bullish stance slipped to 8,613 futures and options contracts from 17,679 in the prior week. As such, the funds' long position doubled to 35,437 contracts in the CBOT oilshare - measuring soyaoil's relative value in soyabean products - but this has likely contracted in the days since.
Trade sources indicated that commodity funds were net sellers of the vegoil late last week. This was particularly true on Friday, as benchmark December soyaoil futures posted its largest single-day loss since September 26. Funds were likely slight net buyers of soyameal over the last three sessions. The December contract on Thursday notched its biggest daily gain since October 12, but most of it was given back in Friday's trade.