- Funds can be right!
- Notice in the chart below that funds are sitting on a record net short US wheat position (as we have previously reported) and that futures contract prices continue to decline – to levels not seen since 2010! This means that funds are profiting from their bearish wheat stance.
- Funds have generally been short wheat since the drought of 2012. This is a big change in their positioning from 2006-2012. Either funds have a macro sense of how to position, or they pay attention to world wheat fundamentals.
- For whatever reason, funds now want to be short the grain/soy markets and rallies only occur amid unforeseen fundamental sparks.
- Moral of the story – watch out for unforeseen fundamental sparks!
