Funds cover CBOT corn shorts ahead of USDA’s monthly update -Braun

Before the U.S. government's crop outlook was released last week, speculators decided to abandon their short positions in corn trading in Chicago.

However, money managers held on firmly to their bullish stance on soy, a position they have maintained since early 2020. In the days leading up to the Oct. 12 reports from the U.S. Department of Agriculture, trading in CBOT corn and soybean futures remained calm, with both experiencing a slight decline in the week ending on Oct. 10.

During that week, money managers significantly reduced their net short positions in CBOT corn futures and options, going from 159,433 contracts to 112,691 contracts. This marked their largest instance of net buying since late July. Most of this activity was driven by short covering, although there were few new long positions established as well.

Recent short covering in corn may be seasonal based on historical position data. Money managers were also bearish on corn at this time of year from 2016 to 2019, and like this year, late September marked the bottoming of funds net short in three of those four years (not 2017).

December corn futures had reached their U.S. harvest lows by mid-September in 2016, 2018 and 2019, and so far, the harvest low for December 2023 corn CZ3 sits on Sept. 19 at $4.67-3/4 per bushel.

Money managers in the week ended Oct. 10 reduced their net long in CBOT soybean futures and options to 2,166 contracts from 5,001 a week earlier, predominantly on exiting longs. Money managers have not held a bearish soy view since April 2020 but have come close a couple times.

However, overall speculators soybean net short was preserved through Oct. 10 as other reportable traders were only slight net buyers during the week. That small net short was established in the prior week for the first time since March 2020.

USDA on Thursday estimated U.S. corn and soybean yields below market expectations, sending prices higher. CBOT soybeans Sv1 rose 0.7% over the last three sessions and corn Cv1 added 1.6%.

However, most-active soybeans before the report on Thursday had notched their lowest levels since December 2021, and December corn has traded below $5 per bushel since Aug. 21.

SOY PRODUCTS AND WHEAT

Money managers have held bullish views in CBOT soybean oil futures and options since June, but soyoil futures have come under pressure in recent weeks. That is due in part to plunging prices for biomass-based (D4) credits RIN-D4-US, which help uphold biofuel blending laws under the U.S. Renewable Fuel Standard.

Most-active CBOT soybean oil futures BOv1 fell nearly 7% in the week ended Oct. 10, and money managers cut their net long to 25,967 futures and options contracts from 41,384 in the previous week. Futures rose more than 2% in the last three sessions, though they touched four-month lows on Thursday.

Money managers reduced their net long in CBOT soybean meal futures and options to 32,059 contracts through Oct. 10 from 40,985 a week earlier, despite a 1.6% rise in futures during the period. Futures climbed more than 3% between Wednesday and Friday, hitting a one-month high on Friday.

CBOT wheat futures Wv1 slid nearly 2% in the week ended Oct. 10, and money managers established their most bearish stance in four months of 104,335 futures and options contracts, up from a net short of 98,788 a week earlier.

Wheat rebounded nearly 4% in the last three sessions, lifted by another rare, large Chinese purchase of U.S. wheat, the second such sale this month. USDA on Friday confirmed that U.S. wheat export sales for the first week of the month were the highest for any week in more than a year.