- The industry is still clamouring about last week’s rise in US corn net long fund position at a time when corn prices fell $.40. As most know, fund activities do not always correlate with price – but as the graphic below suggests, there has been a massive shift in corn ownership from the farmer and commercials to the funds. The wet weather rally from mid-June into early July allowed farmers the chance to sell old crop cash corn profitably – and to hopefully sell additional new crop supply. Whether the CFTC makes a correction to Commitment of Traders data in this week’s report, as some bulls argue, is unknown. But, funds will still have considerable market length to shed as corn seasonal price trends turn lower in August. Our “back of a fag packet” calculation estimates that funds are still long at least 200,000 contracts! This leaves some room for movement……
- The soon-to-be-deliverable August soybean and soybean meal futures offered short covering support in yesterday’s trade. Funds were on the buy side of the market with the cash market offering early support. US farmers are tight holders of any remaining old crop supply, but cash basis levels are well below of levels of recent years. Old-crop soybean futures rose 3-8 cents while new-crop futures were unchanged to down 2 cents. Funds were reported to have bought 2,000 contracts of soybean meal, sold 5,000 soybean oil, and were even on soybeans. The chart below shows weekly Argentine farmer soybean sales relative to the seasonal for total Argentine crush and exports. Total sales are 36.7 million mt, up from last year’s 27.8 million mt and the 2nd highest on record. The pace of farmer sales is more than 3 standard deviations above what is expected based on the USDA’s projections. In particular, the USDA is projecting exports of just 8 million mt. However, at this pace, Argentine exports could match or exceed the record 13.7 million mt (503 million bu) that was shipped in 2009/10.
