- Last night saw the publication of the holiday delayed CFTC report which showed a significant expansion in the overall fund cumulative net short position in wheat, corn and soybeans. Our archives (which go back to the start of 2012) show the largest cumulative net short position with both wheat and soybeans at individual record short levels. Whilst it should be noted that the large net short fund position does not engender a bull market we note that there seems to be no compelling fundamental to spur a rally. However, the fund short does raise a cautionary note ahead of the January 12th USDA Crop report. Research argues that the large net short fund position will cause Chicago prices to trade sideways into the January report – with the report to determine valuations in to February.
- Brussels has issued weekly wheat export certificates totalling 354,519 mt, which brings the season total to 13,582,371 mt. This is 1.652 million mt (10.84) behind last year and leaves a requirement of a minimum weekly export total of over 711,000 mt to hit the latest USDA export total.
- Trade in Chicago has been somewhat slower today with some slight gains showing across all three key ag commodities as we approach the close. Regardless of fund positions, which are stemming the enthusiasm of the bears to push much lower for now, global FOB prices continue to soften and fundamentals argue this is correct – for now,Argentina continues to lead the way lower in searching for grain and soybean demand. It is rumoured that Argentine low protein wheat has traded into SE USA, and whilst confirmation is lacking it appears that the calculations work. Despite the recent export tax reductions/removal and Peso devaluation in Argentina there remains much unsold soybean supply in the hands of farmers who are reported to have only sold 2-3 million mt. It is estimated that as much as 15-16 million mt of old crop supply remains to be sold and with Brazil still in place to record a record crop we could well have greater pressure to see before prices eventually bottom out.