In the week ended Jan. 15, hedge funds and other money managers slashed their net long position in CBOT corn futures and options to 27,459 contracts from 75,194 a week prior. However, daily market estimates would have suggested the Jan. 15 position closer to 59,000 contracts.
Using daily estimates of fund activity from Reuters beyond Jan. 15, commodity funds are assumed to be long by about 18,000 futures and options contracts through Tuesday's trade. However, those estimates placed funds net short by about 3,000 contracts through Monday.
The rapid selloff mid-last month, along with the fact that the market very much underpredicted its strength, may suggest that funds are no longer carrying a meaningful long position in corn, and they may not be as eager to defend it. Prices have not necessarily declined since mid-January, though. March corn futures are still holding around $3.78 per bushel, which has been the average price for the past month or so.
Money managers also sold a sizable chunk of soyabeans in the week ended Jan. 15, increasing their net short to 20,882 futures and options contracts from 1,220 in the previous week. But as of Tuesday, funds are projected to be holding a mild long in soyabeans of about 9,000 contracts.
If the trade estimates are correct, speculators are still undeterred in their favourable soyabean views despite record-high US supply. March soyabeans on Tuesday finished 2.7 percent higher than on Jan. 15, though the $9.17-1/2 per bushel close was generally consistent with previous sessions so far this month.
Both the CBOT corn and soyabean market have been suffering from directionless trade in recent weeks, and unresolved political issues, namely the trade war and US government shutdown, are likely major culprits. Further clarity on these issues should arrive in a matter of days. Top US and Chinese officials will meet in Beijing later this week to continue forging the path to a deal between the two countries, which is needed to avoid an escalation of US tariffs on Chinese goods after March 1.
US President Donald Trump was generally upbeat about the talks on Tuesday, but market participants were unhappy to hear last week that Trump was unlikely to meet with Chinese President Xi Jinping before the deadline. US congressional negotiators reached a tentative spending deal on Monday that would avert another shutdown on Friday, though Trump was not pleased that it failed to provide funds for his US-Mexico border wall. However, he said this week that he was not expecting another shutdown.
Commodity and equity markets have been on edge ever since US government funding lapsed on Dec. 22 over a dispute on the border wall. On the agriculture side, the recently ended shutdown has severely delayed some weekly and monthly datasets from the US Department of Agriculture, which has left a large void for market participants. As in soyabeans, money managers axed bullish views in soyabean meal in the week ended Jan. 15, moving to a net long of 10,758 futures and options contracts from 26,010 in the prior week. Daily estimates through Tuesday place commodity funds long in meal by about 3,300 contracts.
In soyabean oil, money managers are predicted to be net short by about 31,000 contracts as of Tuesday, down from their Jan. 15 short of 48,162 futures and options contracts. According to CFTC, funds have not been bullish in soyabean oil since early January 2018.
Speculators have been toying with optimism in CBOT wheat, as US demand has improved and is expected to continue to do so in the coming months, though supply uncertainties remain for top exporter Russia. Commodity funds are projected to be holding a slight net short position in wheat of about 2,000 contracts through Tuesday.