PHOTO
(The opinions expressed here are those of the author, a market analyst for Reuters.)
NAPERVILLE, Illinois - Speculators last week established another record net short in Chicago-traded soybeans as strong U.S. crop prospects and an oversupply of beans in China have dragged futures to near four-year lows.
In the week ended July 16, money managers expanded their net short in CBOT soybean futures and options to a new high of 185,750 contracts from 172,605 a week earlier, and this was predominantly the result of new gross shorts.
Funds since late May have sold more than 170,000 soy futures and options contracts, equivalent to more than 850 million bushels. Such a selling streak has been observed only a handful of times, including in mid-2018 when the U.S.-China trade war was heating up.
Most-active CBOT soybeans fell more than 3% in the week ended July 16, settling about 25% lower than on the same date last year. November futures have declined 14% since late May, comparable to years like 2014, 2018 and 2022, though prices had been substantially higher in 2022.
Slumping feed demand in China has also weighed heavily on soybean meal, and both Chinese and U.S. soybean meal futures have declined 8% in the last three weeks.
In the week ended July 16, CBOT soymeal was down nearly 3% and money managers slashed their net long to 26,926 futures and options contracts from 60,693 a week earlier, marking their biggest-ever weekly sell-off in CBOT meal.
Money managers in early July embarked on a record net-buying streak in CBOT soybean oil, but that paused last week as they trimmed their net short by 380 to 16,638 futures and options contracts despite futures tumbling 3%.
Most-active soybeans and soymeal eased fractionally last week and settled on Friday at $10.36 per bushel and $307.50 per short ton, respectively, and the latter represented an all-time low close for the December contract.
November beans remain within striking distance of their contract lows, and Thursday’s huge daily export sale of 510,000 metric tons of U.S. soybeans to unknown destinations did little to stop the bearish momentum.
CBOT December corn is also within a few cents of its low, but futures were basically unchanged in the week ended July 16. Money managers trimmed their net short to 343,396 corn futures and options contracts from the previous week’s all-time high of 353,983, and short covering was the theme.
CBOT September wheat plunged more than 7% in the week ended July 16, setting a new contract low of $5.25-1/4 per bushel on July 16. Money managers extended their net short in CBOT wheat futures and options to a 12-week high of 75,886 contracts from 69,137 a week earlier.
Crop estimates for top wheat exporter Russia have bounced from recent lows but remain around 10 million tons (11%) off early-year ideas, and shipments are seen easing over the next year as a result.
Soft wheat conditions in France, the European Union’s largest wheat grower, have fallen to eight-year lows amid excessively wet weather, and the harvest pace is well behind normal. This contributed to late-week strength in CBOT wheat futures, which rose 2.3% over the last three sessions.
However, December corn slid 1% during that period as a non-threatening weather forecast bolsters ideas for big U.S. crop yields. Karen Braun is a market analyst for Reuters. Views expressed above are her own.
(Reporting by Karen Braun Editing by Matthew Lewis)