Headlines:

  • Hedge funds return to selling ags – although cocoa gets buying spree
    Hedge funds returned to net selling in agricultural commodities for the first time since June, as the exit of risk premium from grains more than offset a scramble to cut bearish bets on softs – in cocoa, at the fastest pace in a decade. Managed money, a proxy for speculators, reduced its net long position in futures and options in the top 13 US-traded agricultural commodities, from coffee to cattle, by 20,483 contracts in the week to last Tuesday, analysis of data from the Commodity Futures Trading Commission regulator shows. The reduction in the net long – the extent to which long bets, which profit when values rise, exceed short holdings, which benefit when prices fall – was the first since late June, ending a spree, which had seen hedge funds swing bullish in positioning by a net 555,000 lots. And it reflected a return to selling in grains, besides an acceleration in the swing bearish in positioning on livestock, which speculators sold down at their fastest pace of 2017. In grains, including the soy complex, managed money swung more bearish on positioning on all the main contracts bar soyoil, over which price sentiment was boosted by hopes that a US court ruling against the US Environmental Protection Agency would lift consumption prospects. In Chicago corn and soybean futures and options, hedge funds turned more bearish for the first time since June amid reduced concerns over the threat of dryness to US Midwest crops.

Summary:

After being heavy on the short side of the market, investors took to taking profits off the table covering shorts. Beans led with double digit gains. The trade has its sights set on the upcoming USDA WASDE reported that is slated for this Thursday. Grains moved higher across the board. Corn added to its gains from Friday. November Beans rallied 10.75 cents and December Wheat was up 8 cents. Rain results across the Midwest was also disappointing which may have also accounted for some of the support found in the markets today.

Export sale activity reported to the USDA came in at 180,800 metric tons of corn for delivery to Mexico during the 2017-18 marketing year and 206,000 metric tons of soybeans for delivery to unknown destinations during the 2016-17 marketing year. Today’s crop progress report is expected to show an increase in the corn crop’s good to excellent ratings of 1% that would put the overall corn conditions at 62% good to excellent. An overall increase of 1-2% is expected for the Soybean rating in the good to excellent category and a 1% increase is expected for the Spring Wheat crop.