By Karen Braun
FORT COLLINS, Colo. – Speculators stuffed even more Chicago-traded wheat into their already-full portfolio through last Tuesday, but that may have marked the peak of funds’ unusual wheat bullishness as futures prices have since eased.
Investors last week shed what little optimism they previously held for soybeans as China has failed to make any big US buys following the trade deal. The uncertainty over the recent virus outbreak has added an extra layer of complexity.
In the week ended Jan. 21, money managers increased their net long position in CBOT wheat futures and options to 41,671 contracts from 29,787 a week earlier, according to data from the US Commodity Futures Trading Commission.
That is funds’ most bullish Chicago wheat stance since August 2018, and last week’s move was produced strictly by the addition of outright longs. In fact, funds have not covered shorts in wheat for three weeks. Gross wheat longs totaled 129,816 contracts as of Jan.
21, the ninth-largest for any week since records began in 2006.
Through Jan. 21, open interest for CBOT wheat surged 7 percent over the previous week, reaching the highest mark since March.
Investors have been eyeing transport disruptions in France and rising Black Sea wheat prices, especially in lead supplier Russia, which may institute a grain export quota. Global exportable supplies have been tightening, especially after Australia’s drought, and recent sales of US wheat have been decent.
Wheat futures have grown extremely top-heavy lately, but the most active contract was down 7 cents per bushel on Friday on profit-taking, technical selling and Chinese virus fears. Commodity funds are predicted to have been light sellers of CBOT wheat futures between Wednesday and Friday.
Through Jan. 21, money managers boosted their net long in Kansas City wheat futures and options to 10,692 contracts, their most optimistic view since November 2018. That compares with a net long of 7,935 contracts a week earlier. Funds also halted their recent buying streak in Minneapolis wheat futures and options through Jan. 21, extending their net short to 3,649 contracts from 3,515 in the prior week.
All commodity and equity markets were lower on Friday as the recent outbreak of coronavirus in China worsened, with cases reported in other Asian countries, as well as in the United States and France as of Friday evening. The timing is particularly bad for global markets as the Lunar New Year, a time of high consumerism, began on Saturday.
The United States and China signed their Phase 1 trade agreement on Jan. 15, a deal in which China promised to boost US agricultural purchases by more than 50 percent over 2017 levels. Soybeans would likely be the biggest-ticket item; however, China has not made any particularly large purchases since the signing, and traders are growing anxious.
In the week ended Jan. 21, money managers flipped to a net short in CBOT soybean futures and options of 13,735 contracts from their net long of 6,290 a week earlier. (https://tmsnrt.rs/2TSytnO)
Most-active soybeans Sv1 on Friday fell to their lowest levels since Dec. 12, ending at $9.02 per bushel, down 6 percent from the 2020 high set on Jan. 2. Commodity funds were likely straight sellers of soybean futures late last week, pressured both by the coronavirus and lack of big Chinese purchases.
Funds pulled back on their bullishness in soybean oil futures and options last week, cutting their net long to 101,259 contracts through Jan. 21 from 112,911 in the previous week.
They also expanded their net short in soybean meal for the fourth week in a row, this time to 36,696 futures and options contracts from 31,720 a week earlier.
Trade estimates suggest that commodity funds continued selling in the soy products late last week. — Reuters
