Futures contracts wheat Chicago's crude oil prices hit contract lows last week, reflecting speculators' long-standing bearish stance on the grain.
Earlier this year, investors took a bearish stance on wheat, which clashed sharply with their extremely bullish bets on corn of Chicago. They have significantly reduced these bullish bets because of global trade uncertainties.
The conflict resurfaced again, but in a slightly different way.
In the week ended April 29, fund managers increased their net short position in CBOT wheat futures and options to a two-year high of 121,415 contracts, up from about 90,000 the previous week.
Funds adjust positions in CBOT wheat and corn
This represented the funds' biggest weekly selloff in CBOT wheat since 2017, largely as a result of fresh short bets.
Money managers also sold off significantly in CBOT corn futures and options through April 29. Net long positions fell to 71,329 contracts from 112,805 a week earlier. Funds have been bullish on CBOT corn for six months. However, the current position is well below the year-to-date high of 364,217 contracts in February. Since 2006, a bearish view on wheat has usually accompanied some bearishness on corn. When there is moderate bullishness on corn, bearishness on wheat tends to be more muted. The current deviation is not as extreme as January’s, but it could indicate excessive bearishness on wheat or excessive bullishness on corn.
Last week, July wheat, the most-active on the CBOT, traded at an average premium of $0.58 per bushel to July corn, well below the decade average of about $1.30. However, the two contracts had previously briefly reached parity in 2023 and 2021.
Wheat fall
Funds’ lack of enthusiasm for wheat extends beyond the Chicago contract. In the week ended April 29, money managers built a record net short position in Kansas City wheat futures and options of 67,269 contracts. Investors have been bearish on Kansas City wheat since August 2023.
Last week, Chicago wheat established a small premium over Kansas City wheat, the first in five months. Traditionally, Kansas City wheat prices tend to be higher than Chicago wheat.
Recent rains well-timed for the U.S. hard red winter wheat crop have put significant pressure on the Kentucky contract. The fact that global exportable wheat supplies are no longer expected to reach multi-year lows has hurt the wheat complex as a whole.
Funds and prospects for soybeans and corn
On April 29, money managers were bearish on CBOT soybean meal futures and options. The bearish bets were near record levels and rose sharply on the week. On the other hand, funds extended their moderately bullish stance on CBOT soybean oil, their fifth consecutive week as net buyers.
They also added to their modest net long position in CBOT soybean futures and options, which reached 38,202 contracts.
Traders, in addition to monitoring political and trade developments, are already starting to look ahead to the USDA’s monthly forecast, which will be released on May 12. The report will provide the USDA’s first projection for the 2025-26 marketing year. It will also include updates for 2024-25, when analysts can expect a possible increase in U.S. corn exports.
Source: Karen Braun and Diane Craft | Notícias Agrícolas
