- Managed money continued with their buying ways last week (through Tuesday) with a net long US ag position of 22,000 contracts vs 30,000 last week, and long 64,000 contracts a year ago. The cumulative net weekly buying is calculated at 52,000 contracts. In corn, funds are net long 111,000 contracts through Tuesday. We estimate that funds are long 205,000 contracts at Friday’s close amid their massive late week buying. Funds are also net long 2,000 contracts of wheat and short 91,000 contracts of soybeans (as of Tuesday). Through Friday, we estimate that funds are net short 57,000 contracts of soybeans and long 18,000 contracts of wheat.
- Soybean traded higher on Friday and extended weekly gains. Soybean futures closed up a heady 40 cents higher on the week. The USDA reported a mix of old crop soybean sales and cancellations Friday morning. There were cancellations of 136,000 mt of soybeans to China, followed by sales of 130,000 mt to China and another 130,000 mt sold to an unknown destination. The net result was sales totalling 124,000 mt.
The CoT report showed that for the week ending Jun 11, funds had covered 2,200 contracts and were still net short 91,000. Hedgers bought 6,500 contracts and were net long 10,300. US farmers are working on getting soybeans planted ahead of the Jun 15 crop insurance deadline for IA and NIL. Producers in IN/OH are hoping the latest wet forecast does not materialise and they can beat their June 20 deadline. We doubt that farmers will take large amounts of PP on soybeans amid diminished payouts. Soybeans are a “me too” marketplace and are rallying with corn. Soy lacks a convincing supply story either via reduced seeding or yield.
- July corn rallied another 11 cents and gained 3 cents on December. Massive spread liquidation amid panicked ethanol user short covering has caused a reach for cash corn. Managed funds as of Tuesday were long a net 111,000 contracts. Since Tuesday, we estimate that funds have bought another 96,000 contracts taking their net long corn position to 205,000 contracts. By way of comparison, at the top of 2012′s rationing rally, managed money was net long 323,000 contracts.
The US weather pattern maintains unwelcome rains across IN/OH, but also features needed rain for the remainder of the Midwest with temperatures warming to near to above normal levels during the last week of June. US corn crop condition improvement is expected across the Plains and much of the Midwest next week. Volatility will stay elevated into the June 28 Stocks & Seeding report. Plains wheat is working into feed rations with a spread at a 23-cent wheat premium. This is a classic supply driven bull market!
- US winter wheat futures ended 3-8 cents higher. Spring wheat continues to weaken slowly amid excellent crop health as heavy rains lie in the offing for the Canadian Prairies. Totals of 1-4″ are offered to Saskatchewan and Alberta which will ease dryness substantially. Contacts indicate that dryness is trimming yield prospects in pockets the Southern and Volga regions in Russia yet their wheat crop estimates of 78-80 million mt are maintained. Some private estimates have been lowered from 83-85 million.
Funds through the week ending Tuesday bought a net 26,000 contracts in Chicago and are net long 2,000 contracts. Funds are net long CME wheat for the first time since September. Work suggests CME’s premium to KC is validated, but the US SRW market has priced itself out of the export market entirely. French, Russian and German wheat ended the week broadly unchanged, with Russian prices for August down slightly. A lasting high looks as if it will be scored in the next few weeks. The US/world wheat outlook is bearish on rising major exporter surpluses and an improving Australian climate forecast.
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Fund positions disaggregated data