Headlines:
- Hedge funds call time on longest bullish spree in softs since 2007
Hedge funds called time on boosting bets on rising soft commodity prices, bringing to an end their longest bullish streak in nine years, even as they accelerated their pace of selling in grains too. Managed money, a proxy for speculators, cut by more than 112,000 contracts its net long position in futures and options in the main 13 US-traded agricultural commodities in the week to last Tuesday, according to data from the Commodity Futures Trading Commission (CFTC) regulator. The drop in the net long – the extent to which long positions, which benefit when prices rise, outnumber short bets, which profit when values fall – was led, again, by grains. Indeed, hedge funds turned net short in the major grain contracts, including the soy complex, for the first time in three months, a marked turnaround from net long of 535,000 lots in mid-June. However, for the first time in two months they cut their net longs also in soft commodities – after eight successive weeks which had built the most bullish position since 2008 – as well as in livestock futures and options.. - Chinese corn area down by 2m hectares
Chinese corn area is down 2.0m hectares this year, the country’s agriculture minister said, as he restated his plan to cut sowings 9% by 2020. Speaking to state media, Chinese agricultural minister Han Changfu saw sowings for the 2016-17 crop year down 2.0m hectares, rather than the 1.3m hectare reduction forecast earlier this year. Based on previous statements by the ministry, this would imply a 2016-17 acreage of some 24.6m hectares. The US Department of Agriculture, sees Chinese corn acres down 2.12m hectares, at 36.00m hectares, the first drop in 14 years.
Summary:
Good weather is on the horizon this week and next week according to the National Weather Service and the trade decided that was reason enough to return to a selling posture. Soybean futures were down over 40 cents today in intraday trading and did not recover much off of the day’s lows posting losses of 35.50 and 38 cents for the September and November contracts. Corn futures joined the party surrendering 8 cents of its own. Corn has not been in a decline quite as rapidly as it did in June and may start showing signs that its price drop is fully discounted by the trade. Wheat continues to trend lower giving up 2.50 cents of its own.
Money managers continue to exit the Ag space. Last week they more than doubled their net short Corn contract positions moving from 29.758k contract to 67.571k contracts. Investors are technically still net long Beans but their bet sizes are well off their watermark net positions and their numbers continue to decline. With more rain forecasted for the next 10 days to two weeks, Beans are poised to have much needed hydration during the all-important month of August.
