Speculators made a big effort at pruning their huge net long
position in the soybean complex, amid improving yield hopes, but reversed a
sell-down in Chicago grains – in time for Friday's 5% rally.
Managed money, a proxy for speculators, cut its net long
position in soybean futures and options below 200,000 lots for only the second
time since March, regulatory data showed.
The net long position, at 195,402 contracts as of last
Tuesday, was still historically large, but nearly 60,000 lots below the record
high reached in May after drought damage to South American crops forced prices
higher to ration demand.
The reduction in the net long position in the week to
Tuesday was achieved through the reduction of long bets, which gain when prices
rise, rather than speculators taking extra short positions, which profit when
values fall, the data from the Commodity Futures Trading Commission showed.
And it came in the face of increasing evidence that the US
crop, while damaged by drought, may not have suffered as severely as earlier
"Latest yield reports support our bias that the corn yield
will contract and the soybean yield will advance appreciably" when the US Department
of Agriculture next week unveils its latest Wasde crop report, Richard Feltes
at broker RJ O'Brien said.
The potential upside for soybean futures from Friday's
close, when they were pulled higher by a strong performance in grains following
USDA inventory data, "is limited given ongoing parade of better-than-expected
soybean yields", he said.
Sell-off in products
The sell-down was reflected elsewhere in the complex too in
soyoil futures and options which, with a cut of more than 13,000 lots to the
managed money net long position, suffered their biggest cut to net long
position in four months.
Sentiment over the contract has been sapped by a collapse in
prices of rival vegetable oil palm oil, which continued its decline in Kuala
Lumpur on Monday, falling to a fresh two-year low of 2,449 ringgit a tonne at
Speculators' net longs in grains and oilseeds, Sept 25, (change on week)
Chicago corn: 272,055, (+1,893)
Chicago soybeans: 195,402 (-14,473)
Chicago wheat: 65,308, (+4,767)
Chicago soymeal: 48,247, (-11,312)
Chicago soyoil: 34,475, (-13,293)
Kansas wheat: 49,628, (-2,012)
The drop in palm oil has been fuelled by fears for Malaysia's
exports, which cargo surveyor Intertek
Testing Services said on Monday fell 0.7% last month, at a time when production
sees a seasonal uptick – implying a rise in inventories and a decreased
pressure on buyers to compete for supplies.
In soymeal, the other product of soybean processing, used in
feed, speculators' net long position dropped below 50,000 lots for the first
time since February, and is now at less than half the level seen at a high in
However, in grains, a trend of speculative selling which
started in August stalled, as investors closed short holdings which in corn
especially have been profitable bets.
Net long positions rose in both Chicago corn and wheat.
Speculators' net longs in New York softs, Sept 25, (change on week)
Raw sugar: 34,121, (+3,278)
Cocoa: 27,876, (+406)
Cotton: 6,356, (-6,658)
Coffee: -8,501, (-116)
And, among soft commodities, a sharp sell-off in sugar ended
too, as renewed rains in Brazil's Centre South put the dampeners on a rapid
pace of cane crushing in the most important producing region of the more
important producing country.
However, in cotton, speculators halved their net long
position, in a sell-down accelerated by the prospect of the US harvest, meaning
fresh supplies available to buyers, and over a potential sell-down by China of
some of its huge state inventories.