NAPERVILLE, (Ill.): Since late July, speculators have been preparing for a scenario where the US corn harvest falls short of original expectations, potentially to a significant degree.
In the four-session week ended Sept. 6, money managers were net buyers of Chicago corn futures and options for a sixth consecutive week, increasing their net long by about 5,000 to 226,479 contracts. Over the latest six weeks, the managed money corn net long expanded by 105,691 contracts, equivalent to 528 million bushels, and most-active CBOT futures jumped 13%. They drifted more than 1% higher in the latest three sessions ahead of the US Department of Agriculture’s Monday report.
That report is expected to show a historically large drop in US corn yield from the previous forecast after hot and dry weather affected crops in the Plains. Analysts also expect 2022-23 US corn ending stocks to be at 10-year lows following the crop reduction. Most-active corn futures ended at $6.85 per bushel Friday, their highest settle since June.
The recent strength leaves price vulnerable to a large downward correction if USDA’s outlook does not match market expectations. Grain prices have also faced headwinds from the resumption of shipments out of Ukraine, but CBOT wheat futures surged more than 7% in the last four sessions as Russian President Vladimir Putin made multiple disparaging remarks about the export deal, saying the “unfair” deal has been implemented “badly.” Money managers’ views on soybeans have stayed nearly constant in the latest several weeks with a net long around 100,000 futures and options contracts, including light selling in the latest week.