Soybeans grow in a field outside Wyanet, Illinois, U.S., July 6, 2018. REUTERS/Daniel Acker

Column: Funds' bullish soybean stance hits an eight-year high

Stocks News

Karen Braun

FORT COLLINS, Colo. (Reuters) - Investors last week marked their sixth consecutive buying week across Chicago-traded grains and oilseeds despite a downward price correction late in the period, further boosting their historically bullish corn and soybean views.

In the week ended Sept. 22, money managers increased their net long position in CBOT soybean futures and options to 211,143 contracts from 191,774 a week earlier, according to data from the U.S. Commodity Futures Trading Commission.

That is speculators’ most bullish soybean view since Sept. 11, 2012, and it was the sixth consecutive week in which new gross longs outnumbered new gross shorts. The net buying was lighter than expected during the period, which contained three days of strong upward price action and one sharp down day.

Over the last three sessions, most-active soybean futures fell 1.7% after the huge rally a week earlier. Traders await more U.S. harvest activity and Wednesday’s publications from the U.S. Department of Agriculture, which will include domestic grain stocks as of Sept. 1.

China has recently been very active in the U.S. soybean market, but USDA did not confirm any large purchases from the Asian buyer on Thursday or Friday, adding to the negative sentiment. Commodity funds were predicted to have sold 15,000 soybean futures between Wednesday and Friday.

As of Sept. 22, producers expanded their net short in soybean futures and options to 338,490 contracts, which is the second largest ever behind the week ended July 3, 2012. That suggests producers are more heavily sold than usual, though it is not specific to U.S. producers nor does it indicate for when the beans are contracted.

Investors have been bullish since early May toward the CBOT oilshare, which measures soyoil’s share of value in the products. Through Sept. 22, money managers boosted their net long in soybean oil to 101,702 futures and options contracts from 94,564 a week prior.

They also extended their net long in soybean meal futures and options to 65,248 contracts from 43,697, and the new stance is funds’ most optimistic since mid-June 2018.

Product futures fell over the last three sessions, oil to a much larger degree than meal, and funds were seen as light sellers during the period.

CORN AND WHEAT

In the week ended Sept. 22, money managers increased their net long in CBOT corn futures and options to 95,912 contracts from 58,556 in the prior week, substantially more buying than the market expected.

That marked the seventh consecutive week in which investors were net corn buyers, and it established funds’ most bullish corn view since July 30, 2019, though for the time of year it is the most bullish since 2012.

U.S. harvest is gaining speed and while export demand has been very strong, concerns remain about reduced U.S. ethanol output and consumption. Analysts see Sept. 1 U.S. corn stocks at 2.25 billion bushels, about 1% more than a year earlier.

Most-active corn futures fell 1.1% over the last three sessions, and funds were likely light sellers in futures.

Money managers unexpectedly reduced their net long in CBOT wheat futures and options through Sept. 22 to 14,543 contracts from 15,112 a week earlier. The prediction was that they had bought 13,000 contracts.

Funds are estimated to have sold 13,000 CBOT wheat futures between Wednesday and Friday, and futures were down 2.5%. Some of the pressure stemmed from the strengthening dollar, which makes U.S. wheat more expensive on the international market.

In Kansas City wheat futures and options, money managers extended their net long through Sept. 22 to 18,463 contracts, their most optimistic view on hard red winter wheat since Oct. 23, 2018. The net long had totaled 10,192 contracts a week earlier.

Money managers are still bearish toward Minneapolis wheat, though as of Sept. 22, pessimism was the lightest since early April 2019 after funds reduced their net short by 710 futures and options contracts to 2,298.

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