January 13, 2020 / 10:22 AM / 11 days ago

Column: Funds' CBOT views largely unaffected by USDA data dump

CHICAGO (Reuters) - Speculators did not significantly alter their views toward Chicago-traded grains and oilseeds in the days before the USDA data storm last Friday, and the numbers issued by the U.S. agency did not seem to give them much pause either.

A grain trailer empties wheat into the pit at the Farmers Cooperative Exchange in Bessie, Oklahoma, U.S., June 12, 2019. REUTERS/Nick Oxford/File Photo

Professional trading funds maintain bullish views in Chicago-traded wheat and they are still pessimistic toward corn futures and options. But they have adopted a slightly optimistic stance toward CBOT soybeans ahead of this week’s expected Phase 1 trade deal signing between the United States and China.

The U.S. Department of Agriculture on Friday issued several key pieces of data, including 2019 U.S. corn and soybean production, U.S. quarterly grain stocks, U.S. winter wheat plantings for the 2020 harvest, and domestic and global supply and demand updates.

The data showed a slight decrease in U.S. and global corn and wheat supply predicted for this year, and soybean stocks were mostly steady. CBOT futures markets inched higher on Friday apart from soybean oil, and commodity funds were seen as net buyers late last week of CBOT corn, wheat, soybeans, and soybean meal.

In the week ended Jan. 7, hedge funds and other money managers flipped to a net long position in CBOT soybean futures and options of 1,159 contracts, according to data from the U.S. Commodity Futures Trading Commission. Funds held a net short of 3,159 contracts a week earlier.

Much of the building optimism in soybeans is linked with the hope that the Phase 1 trade deal will prompt China to significantly increase purchases of the oilseed, which plunged when the trade war broke out. China’s soybean demand has also suffered since the deadly outbreak of African swine fever tore through its hog herd beginning in August 2018.

China is expected to buy much more U.S. farm goods all around, including corn, although many industry participants are skeptical. But corn futures are at five-year highs for the date, and investors seem to believe those prices are overdone.

As of Jan. 7, money managers held a net short corn position of 80,887 futures and options contracts, a decline of less than 2,000 contracts versus a week earlier. (tmsnrt.rs/2Th5auU)

Funds’ net long in CBOT wheat futures and options rose by 417 contracts through Jan. 7 to 27,687 contracts. Their K.C. wheat net long jumped to 2,816 futures and options contracts from 1,284 in the prior week.

USDA placed U.S. winter wheat plantings at 30.804 million acres, a 111-year low, including a record small hard red winter wheat area. But analysts underestimated soft red winter wheat plantings by 10%, and that could provide some headwinds to funds’ bullish CBOT wheat stance.

The largest relative change in speculators’ views last week came in Minneapolis wheat futures and options, where they slashed their net short to 4,309 contracts from 8,416 in the prior week, driven primarily by short-covering. In the four weeks ended Jan. 7, money managers bought nearly 19,000 Minneapolis contracts, their most ever for such a period.

Funds remain strongly bullish in CBOT soybean oil futures and options, though they trimmed their net long to 110,862 contracts through Jan. 7 from 112,183 in the previous week. They also expanded their net short in CBOT soybean meal futures and options to 27,914 contracts from 25,410 a week earlier.

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

Editing by Lisa Shumaker

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below