Column: Funds hit new record short in CBOT corn but load up on hogs

 

Karen Braun, Reuters†

April 15, 2019

 

The opinions expressed here are those of the author, a market analyst for Reuters.

 

WINTER PARK, Colo. (Reuters) - Speculators established yet another record bearish position in Chicago-traded corn last week, but any short-covering rally in futures that might result is likely to be lackluster.

 

U.S. corn inventory has swelled to much larger levels than market participants were originally expecting, and the harvests in Brazil and Argentina may be bigger than previous predictions.

 

In the week ended April 9, hedge funds and other money managers increased their net short position in CBOT corn futures and options to a record 271,746 contracts from 246,735 in the prior week, according to data from the U.S. Commodity Futures Trading Commission.

 

That surpassed the previous record of 261,326 contracts set in the week ended March 19, and the move was primarily the result of new shorts entering the market. The number of outright corn longs fell to 181,710 contracts, the fewest since the first week of 2017.

 

Futures are prone to intense short-covering rallies when funds hold such massively bearish views, especially during the U.S. corn and soybean growing season, which is just getting under way.

 

But producers are holding a very large amount of corn that they can unload onto the market as soon as futures rise, a factor that will limit the upward price movement. Hedge funds will be able to exit their short positions for a very low price...

 

HOGS AND SPRING WHEAT

 

A bullish story has recently developed in lean hogs as global pork supply could sharply decline this year. African swine fever has killed millions of pigs in China, the largest consumer and producer of pork.

 

In the week ended April 9, money managers extended their net long position in CME lean hog futures and options to 50,482 contracts from 36,791 in the prior week.

 

The recent buying streak is the largest on record. In the four weeks ended April 9, money managers purchased 54,115 hog contracts, surpassing the four-week total of 43,083 from a week earlier. Prior to that, fundsí four-week buying record in hogs was 41,808 futures and options contracts in the period ended May 30, 2017.

 

Speculatorsí all-time bullish hog stance was 97,952 contracts set Sept. 24, 2013. June lean hogs rose another 3.3 percent between Wednesday and Friday.

 

Aside from corn and lean hogs, the other interesting move by commodity funds in the week ended April 9 was the record sell-off in Minneapolis wheat futures and options. Money managersí net short in spring wheat exploded to 9,457 contracts from 2,178 in the prior week, a net move of 7,279 contracts...

 

SOYBEANS AND WINTER WHEAT ...

 

more, including charts

https://uk.reuters.com/article/us-cbot-grains-braun/column-funds-hit-new-record-short-in-cbot-corn-but-load-up-on-hogs-idUKKCN1RR0WT