Funds remain steadfast in bullish CBOT bets ahead of USDA snoozer -Braun


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NAPERVILLE — Continued uncertainty in the Black Sea and tight global grain and oilseed supplies had speculators retaining optimistic views last week in Chicago-traded grain and oilseed futures as they awaited monthly data from the U.S. Department of Agriculture.

Analysts correctly assumed USDA’s Friday supply and demand projections would not change much from last month or offer any surprises, though the numbers were possibly a bit unfriendly to corn bulls.

But the agency’s estimates did reflect some of the ongoing concerns in the soybean market with tightening U.S. stocks, which had futures challenging all-time highs late last week.

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Most-active CBOT soybean futures rose almost 3% in the week ended June 7, but money managers shed gross longs that week, reducing their net long position to 158,928 soybean futures and options contracts.

Data from the U.S. Commodity Futures Trading Commission published on Friday also showed no significant bump in soybean gross shorts, which had been an increasing but light trend in corn, potentially signaling reduced supply fears from investors.

But after eight consecutive weeks of adding gross corn shorts, money managers covered nearly 15,000 in the week ended June 7, the most for any week since January 2021. They also abandoned gross corn longs for a third straight week, axing more than 19,000 contracts in the latest week.

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That dropped the managed money corn net long by less than 5,000 contracts to 264,327 futures and options contracts as of June 7, the lowest since October.

Money managers were modest buyers of both soybean products in the week ended June 7, and the soybean meal net long reached a five-week high of 53,169 futures and options contracts.

Most-active CBOT soybeans on Thursday came within 5 cents per bushel of their Sept. 4, 2012, all-time high of $17.89 amid tight old-crop U.S. stocks and healthy export demand. They took a breather on Friday, finishing down more than 1% for the day at $17.45-1/2.

USDA’s prediction of U.S. soybean stocks-to-use for the 2021-22 year ended Aug. 31 has contracted for five consecutive months now, with the latest estimate of 4.6% below last year’s 5.7%. The agency’s export peg has risen 6% over that period.

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The 2022-23 forecast is roomier but allows very little room for error, as USDA’s assumptions already include a record U.S. soybean planted area and a near-record yield.


Money managers were light sellers of Chicago wheat futures and options through June 7, trimming their net long to 12,675 contracts. They also whittled their K.C. net long to a 17-week low of 37,498 futures and options contracts.

Wheat and corn futures were particularly heavy at the start of June with prospects of freeing Ukraine’s stalled exports with the help of fellow Black Sea neighbor Turkey and increased cooperation from Russia.

But the same conclusion remained at the end of Wednesday’s talks between Moscow and Ankara: Ukraine does not trust safety of its ports and vessels can be guaranteed and Russia wants Western sanctions lifted, blaming Ukraine for the port blockages.

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USDA’s Friday estimates reflected no improvement in Ukraine’s export outlook, as corn and wheat exports for 2022-23 stayed unchanged from last month’s estimate. The current situation did not get any worse either as old-crop forecasts were also unchanged.

However, the agency greatly increased Ukraine’s corn crop to 25 million tonnes from 19.5 million estimated last month, which was simply added to its ending stocks. This buildup of corn, if ever released, would be relieving for importers but potentially challenging to U.S. and other exporters.

USDA’s take on old-crop U.S. corn exports eased from last month, and that unexpectedly added to ending stocks. USDA maintained its huge Brazil corn crop number and Brazil’s counterpart increased its peg on Wednesday. The harvest should be record-large by a wide margin despite some historically dry weather.

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U.S. corn export optimism was partially tied to expected losses for Brazil’s crop, which is exported starting in July with the harvest. Brazil’s 2021-22 output is seen up 33% from last year.

The U.S. corn crop is off to a great start per USDA, which rated the crop 73% good-to-excellent a week ago. Extremely hot and dry weather for this week supported futures late last week. Traders are waiting to see if this trend carries into July, which could damage yield prospects.

Most-active CBOT corn futures rose 2% in the last three sessions, settling at $7.73-1/4 on Friday, up 2.6% on the month so far. Gains in the new crop were more modest.

CBOT wheat trading volume has increased this month as is seasonal, but it remains lighter for early June than in previous years, and open interest is still the lowest for the date since 2009. Most-active futures were unchanged late last week but finished Friday down 1.5% for the month. Karen Braun is a market analyst for Reuters. Views expressed above are her own.

(Editing by Matthew Lewis)



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