Funds Push CBOT Corn Long To Decade High As U.S. Weather Risks Brew

Zawa.com ^ | 6-6-2021 | Karen Braun

[blam]

Money managers increased their net long position in CBOT corn futures and options to 401,993 contract

FORT COLLINS, Colo.- Speculators have been buying Chicago-traded corn since August when troubles began for the 2020 U.S. harvest, and that enthusiasm expanded even more last week as weather concerns are on the radar for the 2021 crop.

In the week ended April 13, money managers increased their net long position in CBOT corn futures and options to 401,993 contracts from 386,619 a week earlier according to the U.S. Commodity Futures Trading Commission.

That is funds’ most bullish corn stance and their first time past the 400,000 mark since January 2011. Traders had pegged the corn long to blow past September 2010’s record of 429,189 contracts, but the buying fell far short of expectations.

U.S. corn planting is in its infancy, but April is likely to remain cooler than normal and threatens to slow progress. Soil conditions are very dry, especially in the Northern Plains, which could raise crop risks down the road and contribute to potential drought.

The market has also been eying dryness for some of Brazil’s second corn along with robust global demand, which with the cold weather pushed CBOT corn to contract highs on Thursday. Most-active May futures rose above $6 per bushel for the first time since June 2013 and December corn reached $5.17.

Corn open interest jumped 4% in the week ended April 13 and most-active futures were up 4.6%. New-crop corn led the way in the last three sessions, rising 1.6%, and commodity funds are seen slightly extending their bullish bets.

The dry conditions in the Northern Plains have also been a factor for Minneapolis wheat, which rose 6.2% in the week ended April 13. The May contract on April 14 set a contract high of $6.68-1/2 per bushel and futures rose just over 2% between Wednesday and Friday.

Money managers boosted their Minneapolis wheat net long to 9,680 futures and options contracts through April 13, up more than 4,000 on the week and immediately following a record two-week selloff.

Funds sold Kansas City wheat for a ninth consecutive week, reducing their net long to 11,028 futures and options contracts from 14,510 a week prior. That is their least optimistic view since September, and it comes despite a 5% rise in nearby futures during the week. The May contract rose another 4.2% in the last three sessions.

In Chicago wheat futures and options, money managers increased their net short by less than 6,000 contracts to 13,217. However, most-active futures rose 4% between Wednesday and Friday, and trade estimates suggest funds erased their net short by the end of the week.

SOYBEANS AND PRODUCTS

Through April 13, money managers reduced their net long in CBOT soybean futures and options to 142,258 contracts from 154,305 a week earlier. That is nearly their least bullish soybean stance since August.

Funds are far less optimistic on soybeans than in October, when their net long reached nearly 240,000 contracts. Most-active futures are 37% stronger now than they were then, and they are only 2% off their March highs after rising 3% between Wednesday and Friday.

U.S. farmers have a wider window to plant soybeans than corn, so the market is not yet worried about soybean planting. But concerns remain over Chinese soybean demand as crushing has fallen and new cases of African swine fever have been popping up.

New-crop November soybeans have sharply lost ground versus December corn over the last 10 days. That soybean-corn ratio in early April was historically elevated at levels above 2.6, which normally favors beans, but it fell below 2.5 last week.

Funds staged their largest soybean meal selloff in nearly a year through April 13, shedding more than 17,000 contracts from their net long and bringing it to 43,830 futures and options contracts, their least bullish since September. That was on a 2.8% decline in futures, but they added all that back in the last three sessions.

Money managers added just over 4,000 futures and options contracts to their soybean oil net long, lifting it to 81,165 contracts as of April 13. That snapped a six-week selling streak and came despite a drop in nearby futures.

Both May and July soybean oil futures rose 6% in the last three sessions amid strength in soybeans and competing global vegetable oil markets, so funds are seen solidly maintaining their long.

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[blam]

Everyone seems to be finding reasons to raise prices.

Corn in my area is already chest high.

[Yo-Yo]

If we just stopped burning our food as fuel for our cars, there wouldn’t be a problem.

[Pollard]

Most of it goes to feed and fatten livestock. A lot of it also goes into food ingredients for humans and pets. They can extract hundreds of things from corn. The scientists get giddy talking about it.

[ConservativeInPA]

This article reads like it was written in April. Part of high commodity prices is a very weak USD. Also, a high number of contracts can be attributed to agrabusiness and cooperatives with larger crops that are simply locking in a return.

[blam]

"If we just stopped burning our food as fuel for our cars, there wouldn’t be a problem."

After the ingredients needed to make alcohol are extracted, the remainder is fed to the cows/animals.

[xzins]

Here in S. Ohio it is planted and thru the ground, but under a foot tall. Lots of rain and late planting

[PGR88]

https://www.ers.usda.gov/topics/crops/corn-and-other-feedgrains/feedgrains-sector-at-a-glance/

40% of US corn crop goes into making ethanol. Not a small amount at all.

[phormer phrog phlyer]

Gotta keep those in Iowa happy.

[kvanbrunt2]

Well i planted corn in my garden for the first time

[Pollard]

Leave it to the government to contradict themselves in a single article

Most of the crop is used as the main energy ingredient in livestock feed.

from a Government-mandated low of 60.2 million planted acres in 1983 to close to or exceeding 90 million since 2010. Much of this growth in area and production is a result of expanding ethanol production, which now accounts for nearly 40 percent of total corn use.

The graphic above and this article has them about the same. About 1/3 for feed and just over 1/3 for fuel https://www.usda.gov/media/blog/2019/07/29/corn-americas-largest-crop-2019

[shanover]

Corn in NJ after good rain grew a foot. I love those cornfields.

[bigbob]

Well, here in the Illinois corn belt it’s foot high at most and the ground is dry as a popcorn fart.

Some rain coming this week.

[blam]

"Well, here in the Illinois corn belt it’s foot high at most and the ground is dry as a popcorn fart."

California And Nevada Are Now 100% in Drought ("...a shocking food shortage very soon")

[ptsal]

Tassled out in Central Texas.

The small grain fields are boggy and challenging for combines.