Funds’ bearish CBOT corn bets clash with thinner US plantings
SPECULATORS maintained their big short in Chicago corn in front of pivotal US government data showing US farmers planting fewer corn acres than expected.

In the week ended March 26, money managers slightly increased their net short in Chicago Board of Trade (CBOT) corn futures and options to 251,730 contracts from 242,988 in the prior week, predominantly on new gross short positions.

That is well off the record 340,732 contracts set five weeks earlier though still very bearish for any time of year, leaving investors vulnerable to bullish market forces.The US Agriculture Department last Thursday pegged US corn plantings nearly 2% below the average trade guess, and most-active CBOT corn futures surged 3.6%, their best session in months.

Funds’ corn positioning has recently resembled that of early 2019, when new record shorts were forged in both March and April. However, both US corn acres and quarterly stocks were notably bearish in March 2019, opposite to this year’s outcomes, which also featured smaller-than-predicted March 1 corn stocks.

Money managers in the week ended March 26 covered some short positions in CBOT soybeans, trimming their net short to 134,780 futures and options contracts from 148,339 a week earlier.

US soybean plantings landed on the average trade guess and quarterly stocks were a bit larger than anticipated, and CBOT soybean futures drifted fractionally lower between last Wednesday and Thursday. US markets were closed on Friday.

Funds achieved a new record bean short in early March, but they had also set records in April and May of 2019, similar to corn.

Soy acres were bullish and quarterly stocks bearish in March 2019, though US bean supplies were overly stuffed at that point off the trade war with China.

US planting delays prompted funds to start covering corn and bean shorts in mid-May 2019. Funds were net long corn by the end of May but stayed short beans until October 2019, as supplies were still plentiful despite a huge loss in US soy acres that year.

Brazil and Argentina both harvested record corn crops in 2019 and soybean production was sufficiently strong, supporting the bearish narrative.

Those countries are seen harvesting healthy, but not record crops this year, though Argentina’s corn output could contend.The threat of dry weather has been lingering for many of Brazil’s corn producing regions, where the heavily exported second crop is moving toward its key development period.

Last Sunday’s evening weather models show decent rain over the next couple weeks in the centre-west but drier prospects for the south.

Money managers in the week ended March 26 flipped to a net long in CBOT soybean oil futures and options of 951 contracts. That compares with a net short of 14,748 a week earlier and 62,473 contracts three weeks earlier. Most-active soyoil futures rose 7.5% in those three weeks but fell 1% between last Wednesday and Thursday. — Reuters

Karen Braun is a market analyst for Reuters. The views expressed here are the writer’s own.
Agriculture
SPECULATORS maintained their big short in Chicago corn in front of pivotal US government data showing US farmers planting fewer corn acres than expected.