Headlines:

  • Hedge fund reticence to cover shorts in grains ‘bodes well for price rises’
    Commentators flagged the potential for grain and soy price gains after hedge funds were revealed to have covered fewer of their short bets than expected – at a time of growing worries over the dent to North American crop prospects from poor weather. Managed money, a proxy for speculators, in the week to last Tuesday returned to a bearish shift in positioning on the top 13 US-traded agricultural commodities, lifting their net short by nearly 9,000 lots to 163,141 contracts, analysis of regulatory data shows. However, the selling was focused on grains, in which hedge funds raised by more than 24,000 lots their net short – a position which means that short holdings, which profit when values fall, exceed long bets, which benefit when prices gain. In New York-traded soft commodities, speculators turned marginally more positive on positioning, pulling out of an 11-week sell down, the longest on records going back to 2006. In Chicago-traded livestock contracts, managed money raised its net long position by nearly 13,000 lots to 180,000 contracts – the biggest since September 2014, the data from the Commodity Futures Trading Commission showed.

 

Summary:

Corn, Soybeans and Wheat continued in strength today following the gains from Friday’s moves. A wet weekend across most of the Midwest and a weaker US Dollar has again lifted prices higher and if price stability can hold up long enough, Managed Money and Hedge Fund players might start to cover their current record level short positions. Corn has returned to price levels that are close to testing previous highs. This advance will be the 4th attempt at these levels. This go around we believe that resistance may not hold up this time. Farmers made modest progress planting last week despite rain that left more than 82% of the Corn Belt with surplus soil moisture. Planting advancing to 82% last week with 54% of the crop emerged. Soybean planting was at 56% but the emergence was only at 14%. Hedge funds covered a little of their short position in soybeans before selling more later in the week with the Brazilian scandal scare. Rain continued cause issues for the Winter Wheat crop. The most recent Vegetation Health Index for Wheat declined some which may be a precursor of a slip the progress report.