In the past week, speculators have significantly ramped up their bearish positions in both Chicago corn and soybean futures and options, setting new record net short positions. This move comes as prices continue to slide due to expectations of ample supply in the market.
Money managers, who had already established record net shorts earlier this year, have intensified their bearish stance despite a decline in new-crop CBOT corn and soybean futures by 10% and 7% respectively since their previous peak. This timing is notably unusual, coinciding with a critical period for U.S. crop development, although favorable weather conditions have largely supported yield expectations.
The U.S. Department of Agriculture’s recent data on corn supplies, released last Friday, surprised traders with less optimistic figures than anticipated. This development could potentially signal a temporary price floor or even prompt some short covering in the near term.
As of July 9, money managers increased their net short position in CBOT corn futures and options to 353,983 contracts, up from 336,538 the previous week, primarily driven by new gross shorts. Similarly, in CBOT soybeans, the net short position rose to 172,605 contracts from 140,926, with a significant portion of this increase occurring over the last six weeks, marking one of the largest selling streaks in soybeans by funds.
Previously, money managers’ highest net short positions in CBOT corn and soybean futures and options were recorded in February and March of this year. The combined open interest for CBOT corn and soybean futures and options currently stands at 3.08 million contracts, marking the third highest level ever for the second week of July, trailing only behind 2018 and 2019.
Despite a recent slight recovery in corn prices and a decline in soybeans in early July, both commodities have experienced significant declines since the beginning of the year—corn down 17.6% and soybeans down 14.5%.
In related markets, CBOT December soybean oil saw a brief uptick in early July, rising 4.6% during the week ended July 9 amidst an overall 1% decline. Concurrently, money managers reduced their net short positions in CBOT soybean oil futures and options by more than 44,000 contracts over two weeks, largely due to short covering—the most significant such move in recent years.
Meanwhile, CBOT September wheat faced downward pressure, falling 1.5% in the week ended July 9, and further matching contract lows by the end of the week. Despite a robust U.S. wheat crop forecasted by the USDA, money managers reduced their net short positions in CBOT wheat futures and options slightly, indicating the second most bearish sentiment for this time of year since 2016.
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