Funds uphold bullish CBOT bets with trade and weather in focus

Speculators mostly held firm in their views toward Chicago-traded futures and options last week, although they had to brace for more trade tension between the United States and several of its primary trade partners. The revived trade jitters come at the same time the summer weather market is ramping up for US corn and soyabeans. And although global corn supply is set to drop drastically over the next year, not all traders are as rosy on the yellow grain as it might appear.
Last week, the Trump administration did an about-face on the tariff truce with China, then announced it would proceed with steel and aluminium tariffs against Canada, Mexico, and the European Union, even though exemptions were previously being considered.
This angered the US allies who threatened back with tariffs of their own, which included agricultural goods. Canada, China, and Mexico are the top three buyers of US agricultural products.
On the supply front, some 79 percent of US corn was in good or excellent state as of May 27, one of the best initial crop ratings ever. But traders know this is highly subject to change, especially given the hot and dry start to June that most of the Corn Belt will endure.
In the week ended May 29, hedge funds and other money managers increased their net long position in CBOT corn futures and options to 202,427 contracts from 199,970 in the prior week, according to data from the US Commodity Futures Trading Commission.
When combining the managed money and other reportables categories, speculators were actually net sellers of corn through May 29, but they have maintained a fairly consistent bullish stance for about three months. In soyabeans, funds extended their net long position to 107,098 futures and options contracts from 98,228 in the previous week.
According to trade sources, commodity funds were net sellers of both corn and soyabeans over the last three sessions.
Money managers remained extremely bullish in soyabean meal futures and options through May 29. They slightly reduced their net long position to 112,788 contracts from 115,296 in the prior week.
They also defended bearish soyabean oil bets, increasing their net short position to 48,975 futures and options contracts from 47,249 a week earlier. Trade estimates indicate that between Wednesday and Friday, commodity funds were straight sellers of meal with offsetting activity in oil.
Speculators raised the stakes across all three wheat contracts last week. Money managers flipped to a net long in CBOT wheat of 15,318 futures and options contracts from 1,685 net short in the previous week.
Bullish bets were expanded in K.C. wheat to 53,862 futures and options contracts from 46,323 a week earlier, and the managed money long in Minneapolis wheat grew to 4,829 contracts from 2,379.
In the days since, funds were net sellers of CBOT wheat amid technical selling and seasonal pressure from the start of the US hard red winter wheat harvest. Beneficial rains across US and Canadian wheat areas also were a factor.
Major benchmark commodity indexes, such as the Thomson Reuters CoreCommodity Index, hit multi-year highs late last month. Unsurprisingly, commodity index traders massively boosted the amount of outright short and long positions last week in CBOT grains.
In the week ended May 29, the total number of outright positions in CBOT corn, soyabeans, and wheat - including K.C. wheat - reached a record 1.3 million futures and options contracts, significantly up from the previous week's total of just under 1.1 million.
This is contrary to the same figure for money managers, which has fallen to 961,810 futures and options contracts from the recent high of about 1.4 million in January. In wheat and soyabeans, index traders increased the number of shorts and longs by roughly the same degree last week, but bears dominated the corn action.
Index traders upped their outright corn longs to 487,947 futures and options contracts through May 29, an increase of 57,162 on the week. The outright shorts increased to a record 145,271 contracts, a massive surge of 80,118 contracts from the previous week.