July 27, 2020 / 9:23 AM / 11 days ago

Column: Funds maintain CBOT corn, soy views on robust U.S. export demand

FORT COLLINS, Colo. (Reuters) - The recent favorable weather across the U.S. Corn Belt has increasingly supported big corn and soybean yield predictions, reducing the chances for supply concerns heading into next year.

Grain farmers harvest corn amid the coronavirus disease (COVID-19) pandemic in Marion, Texas, U.S., July 17, 2020. REUTERS/Adrees Latif

However, this month’s huge export demand from China for both U.S. crops has prevented speculators from big selloffs in Chicago-traded grains and oilseeds, and the general optimism was still prevalent late last week.

In the week ended July 21, money managers slightly extended their net short position in CBOT corn futures and options to 137,770 contracts from 133,625 a week prior, according to data from the U.S. Commodity Futures Trading Commission.

Most of that increase came from the addition of outright shorts, and the move was in line with what trade estimates had suggested.

Corn futures dropped on Friday, but the most-active contract rose 1.3% over the last three sessions, as U.S. export sales for the upcoming marketing year stand at a seven-year high. About half of those sales are to China.

Commodity funds are predicted to have bought about 12,000 corn futures between Wednesday and Friday.

They also were seen buying a similar amount of CBOT soybean futures over that same period, though fund buying in the oilseed through July 21 was about half as heavy as predicted. Funds expanded their net long in soybean futures and options to 75,809 contracts from 65,975 in the week before.

The U.S. Department of Agriculture has issued a daily export sales report for nine consecutive days now, and most of those sales were soybeans. China’s new-crop U.S. soybean bookings stand at a six-year high, leading some analysts to believe that USDA may be underestimating U.S. exports for the 2020-21 season that begins on Sept. 1.

However, traders were a bit cautious on Friday as political tensions mounted between the United States and China over the U.S. closure of the Chinese consulate in Houston. China retaliated by closing a U.S. consulate in Chengdu.

Through July 21, money managers boosted their net long position in CBOT soybean oil futures and options to 36,897 contracts from 10,198 in the prior week. That was funds’ largest weekly purchase of the vegetable oil since last September.

But investors’ view toward soybean meal was little changed, as they trimmed their net short to 29,178 futures and options contracts from 30,451 a week earlier. Funds have been bearish toward soybean meal since mid-April and for most of the past year.

Soymeal futures rose nearly 2% over the last three sessions, so speculators likely trimmed their bearish views even further, but they were seen as slight sellers of soybean oil futures.

WHEAT BULLS RETURN

 Through July 21, investors established a bullish view toward Chicago wheat futures and options for the first time since mid-May. They flipped to a net long of 474 contracts from a net short of 8,327 a week earlier, and that move was mostly due to the addition of outright longs.

In the wheat market, traders have been keeping an eye on international supplies amid a recent rise in export prices and weather concerns in some major suppliers. Late last week, weakness in the dollar lent support to wheat futures.

The dollar on Friday reached the lowest level since September 2018, and a weaker dollar is generally seen as favorable for U.S. commodities since they become more competitive on the world export market.

Most-active CBOT wheat futures jumped nearly 2% on Friday, and commodity funds are predicted to have slightly extended bullish Chicago wheat bets over the last three sessions. Money managers remain bearish toward the other wheat contracts. They cut their net short in Kansas City wheat futures and options to 18,159 contracts through July 21 from 23,566 a week earlier.

However, funds grew more pessimistic in Minneapolis futures and options contracts for the fourth week in a row, boosting their net short to 20,653 contracts from 18,526 a week prior.

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

Editing by Matthew Lewis

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