BY COMFORT OGBONNA
The U.S. government released notably bearish data into grain and oilseed markets on Friday, even though speculators had actively sold Chicago corn, soybeans, and soybean meal in the preceding days.
In the week ending Jan. 9, money managers increased their net short position in CBOT corn futures and options to 230,723 contracts, marking their most bearish stance on corn since June 2020. The week’s net selling exceeded 33,000 contracts, the highest for any week since October, with new gross shorts being the driving factor.
The most-active CBOT corn futures experienced a 1% decline in the week ending Jan. 9, bringing them to four-year lows for the date, down 33% from a year ago due to global supplies recovering.
On Friday, the U.S. Department of Agriculture confirmed the supply expansion, reporting the U.S. corn yield at an all-time high of 177.3 bushels per acre, well above the average trade estimate of 174.9. The record U.S. corn crop, coupled with a substantial increase in China’s crop, pushed global corn stock estimates to six-year highs.
Corn futures plunged over 2% on Friday after the report, reaching new contract lows in seven different delivery months. March futures closed at $4.47 per bushel, the lowest close for the most-active contract since December 2020.
Money managers, traditionally soybean bulls for nearly four consecutive years, started 2024 on a different note. Their CBOT soybean net short of 31,248 futures and options contracts as of Jan. 9 is the largest since early March 2020, compared to a net short of 11,629 a week earlier.
Funds significantly increased new gross shorts in soybeans in the past two weeks, leading to a more than 5% drop in the most-active CBOT futures over that period.
The USDA also reported a larger-than-expected U.S. soybean crop on Friday, and South American production surpassed predictions. As a result, CBOT soybeans dropped to as low as $12.03 per bushel, their lowest level since November 2021.
On Friday, CBOT soybean meal futures reached their lowest levels on a most-active basis since December 2021, extending a two-month decline in prices. The improved crop prospects for leading meal exporter Argentina have contributed to recent pressure on these futures.
During the week ending January 9, money managers experienced their largest-ever net selling week in CBOT soybean meal futures and options. They significantly reduced their net long positions from 43,039 contracts to 10,461, contrasting with the historically large net long of 135,798 contracts just six weeks prior.
Although fund selling in CBOT soybean oil slowed in the new year, money managers increased their substantial net short positions by almost 4,000 contracts to 46,608 futures and options contracts by January 9. Soyoil futures hit seven-month lows on January 8.
Speculators have refrained from actively selling CBOT wheat futures and options since late November. Through January 9, wheat futures had risen over 6% since then. Money managers slightly decreased their net short in CBOT wheat by almost 2,300 contracts to 57,988 futures and options contracts, a stance very similar to the previous year.
While USDA’s global wheat supply estimates exceeded traders’ expectations, U.S. winter wheat seedings for the 2024 harvest fell 6% compared to the previous year.
Over the last three sessions, declines in most-active CBOT futures were as follows: wheat 2.3%, corn 2.7%, soybeans 1.9%, soymeal 1.5%, and soyoil 0.4%.