Speculators were sellers of all Chicago-traded grains and oilseeds last week except for soybeans as global markets tanked amid worsening coronavirus fears, and the ongoing stalemate between the United States and China following January’s trade deal continued to be a wet blanket over the market.
Combined across all CBOT grains and oilseeds, including Minneapolis wheat, funds’ net short as of Feb. 25 stood at 188,775 futures and options contracts. That is their most bearish view in 11 weeks but well off the record short of 719,076 contracts set last May.
In the week ended Feb. 25, money managers reduced their net long in CBOT wheat futures and options to 41,987 contracts from 64,715 a week earlier, according to data from the U.S. Commodity Futures Trading Commission.
That was funds’ largest weekly sale of Chicago wheat in a year, and it was driven by a sharp reduction in outright longs from the previous week’s record high.
Investors’ net long in Chicago wheat has been larger than usual for the time of year and relative to previous years, but the true standout has been the extraordinary number of outright longs. Last week’s reduction in those longs was the biggest since August 2018, the last time funds’ net long grew as large.
Price action late last week suggests the selling continued in Chicago wheat, as the most-active contract slid 2.2% over the last three sessions. Friday’s settle of $5.25 per bushel is down 11% from the Jan. 22 high.
Wheat and most other CBOT contracts had an uphill battle last week against a worldwide market meltdown as coronavirus worries heated up. Global stock markets wiped out nearly $5 trillion in value in the worst week since the 2008 global financial crisis.
The wheat contracts on Friday hit their lowest levels since late last year, including Kansas City wheat. Money managers had cut their net long in Kansas City wheat futures and options through Feb. 25 to 8,260 contracts from 14,312 in the previous week. Funds have held bullish views toward hard red winter wheat since late December.
They also continued selling Minneapolis wheat futures and options for the fourth week in a row, extending their net short to 14,318 contracts from 11,891 the week before. Prior to 2019, that new short would have been record. The current high is 23,231 contracts, set in December.
SOY ESCAPES, CORN LESS LUCKY
Soybeans were the only grain or oilseed to avoid funds’ selling habits last week. Through Feb. 25, money managers cut their net short to 75,130 futures and options contracts from 89,763 a week earlier.
The oilseed also survived the coronavirus panic late last week with May soybean futures rising fractionally over the last three sessions after hitting a nine-month low on Thursday. Commodity funds were seen as modest buyers of soybean futures during that time.
May soybeans finished at $8.92-3/4 per bushel on Friday, the lowest end to February since 2016. The oilseed has struggled to rouse the bulls since the beginning of the year, especially with slowing U.S. sales to China and a monster crop being harvested in Brazil.
Soybean meal prices have also been relatively low, though the most-active contract closed above $300 per short ton on both Thursday and Friday, the first time since mid-January. Commodity funds were pegged to have bought about 19,000 meal futures between Wednesday and Friday, which is an unusually large estimate. Most-active futures rose more than 4% over that period, the largest three-day jump since Oct. 1.
But that was not before pushing their meal short to another record for the fourth straight week. Money managers lifted their net short in soybean meal futures and options to 77,112 contracts through Feb. 25 from 72,468 in the prior week.
Funds also continued their historic selloff in soybean oil futures and options through Feb. 25, cutting their net long to 23,048 contracts from 39,628 in the previous week.
In the six weeks ended Feb. 25, funds sold nearly 90,000 soyoil contracts, the most ever for such a period, and that was largely through a reduction in longs. Prices continued their fall late in the week, with funds estimated to have sold about 16,500 futures contracts.
Money managers boosted their net short in corn futures and options to 95,510 contracts through Feb. 25 from 61,461 a week earlier, and that was the largest weekly corn selloff since September. Funds likely ended the week with a net short in excess of 100,000 contracts, as they were estimated to have sold about 29,000 futures contracts between Wednesday and Friday.
May corn futures finished at $3.68-1/4 per bushel on Friday after hitting contract lows earlier in the session. All corn contracts except for March 2020 and July 2021 set new lifetime lows on Friday.
Source: Reuters (Editing by Matthew Lewis