Managed money’s soybean stance goes long, corn poised to follow: CFTC

Combined positions for futures and options under managed money moved closer into net long positions in the week ending February 13 as the outlook for corn, wheat and soybeans continues to show constructive signs, data from the CFTC’s Commitment of Traders report showed Friday.

Soybean followed last week’s example of hard red winter wheat futures as the net short position that has held sway since December 19, 2017 gave way to a modest net long position of 42,859 lots.

The move came as traders nearly halved their short contract positions from 91,804 lots in the week ending February 6, to hold 53,907 lots a week later – while long contracts gained just under 15,000 lots to 96,766 contracts.

The move came as the ongoing lack of rain in Argentina and south Brazil slays the prospects of the upcoming soy crop, with Argentina’s Buenos Aires Grain Exchange reporting that 56% of the current Argentine soy crop is in either a poor or very poor state.

The data confirms fears the La Niña conditions and the persistent dryness are damaging both the corn and soybean crop.

Soybean meal, which lead the price charge this week, saw open interest pass through half a million contracts and the net long position increase.

Exposed to similar climactic conditions, corn is also poised to turn net long, as the epic short position that has weighed on the market has been slashed to almost nothing in the space of four weeks.

The total net short position stood at 226,876 on only January 16, but has pared in by 95% to stand at 10,614 as of February 13.

The key driver was again a major reduction in the number of short contracts, which fell by 63,856 contracts to 269,216 – still a sizeable position – while long contracts gained a less-convincing 8,454 contracts to 258,602 contracts.

Finally, wheat also saw its net length reduced with soft red winter wheat contracts seeing both long and short positions reduce, but short positions were cut more drastically, tipping the net shorts into a tighter 56,831 lot total – a 32% reduction on the previous week.

Hard red winter wheat, which saw a dramatic move into a net long position in the previous week’s data, saw that length reduce marginally as both longs and shorts drew down their total positions.

In this instance, it was the longs that drew down faster, shaving 9,712 lots versus the 9,281 lots lost from the short camp.