Net short positions slashed as grain complex perks up: CFTC

Net short positions in corn, wheat and soybeans futures and options among the managed money sector were slashed in the week ending January 30, commitment of traders data from the CFTC showed Friday.

In nearly all cases, the driving force was a substantial reduction in short positions as the agriculture complex responded to a plunge in the US dollar on international currency markets and renewed fears over weather and crop quality.

Both factors combined to increase the relative attractiveness of US exports versus other origins, and stoke supply fears across South America’s corn and soybean crops and the US wheat crop, sending futures contract prices soaring.

The soft red winter net short contracted 33% to 96,763 lots as the total short positions fell 45,000 lots to 184,881, with an even greater contraction seen on the hard red winter contract.

Earlier in the week, USDA data had showed a distinct deterioration in the quality of the HRW plantings and that fuelled an 88% contraction in the net short position to a slim 1,897 lots – the smallest net short since October 10, according to Agricensus records.

After months labouring under oversupplied markets, corn contracts saw South American weather fears stimulate interest as open interest increased again with long positions adding 30,000 contracts to 239,369 lots and short positions fall by nearly 60,000 contracts to 370,311.

That saw the net short position fall 40% to 130,942 contracts.

On percentage terms, soybeans saw the greatest contraction in its net short – a 73% fall to 21,849 lots, as dryness in South America returned to the front and centre of traders’ minds.

The ongoing concerns over the weather in South America lead to a raft of revisions of crops, with the Buenos Aires Grain Exchange slashing their forecast for Argentina’s soybean crop by 3 million mt to 51 million mt.

Long positions added a relatively modest 9,721 contracts to 82,911, but short positions were slashed by a third on the previous week’s, coming in at 104,760 to cut 60,000 positions out of the net short total.

At 21,849 lots, the net short position is the smallest since December 12, when the contract most recently went from net long to net short.