RSS
Twitter
Linked In
News In
News
Linked In
RSS
https://twitter.com/Agrimoney
http://www.newsnow.co.uk/h/Industry+Sectors/Agriculture

You are viewing 1 of your 2 complimentary articles.

Register now to receive full access.

Already registered?

Login | Join us now

Hedge funds most gloomy ever on ag price prospects

Twitter Linkedin

Hedge funds have turned their least optimistic ever on prospects for agricultural commodity prices, slashing exposure to rising soybean futures, and hiking their net short position in corn to a record high.

Managed money, a proxy for speculators, slashed its net long position in futures and options in the major US-traded agricultural commodities by nearly 48,000 contracts to 58,489 lots, Agrimoney.com analysis of regulatory data shows.

This net long – the level to which long positions, which benefit when prices rise, outnumber short bets, which profit when values fall – is the lowest since records began seven years ago.

And it reflects, rather than waning interest in agricultural commodities, growing pessimism over prices, which for grains and oilseeds, and many soft commodities too, are being depressed by expectations of much-improved supplies.

Bearish on corn

Such expectations are particularly strong in corn, for which benign Midwest weather during peak pollination over the last three weeks has prompted a turn upward in the tide of US yield expectations, from the likes of FCStone, Macquarie and Commodity Weather Group.

Speculators' net longs in grains and oilseeds, July 30, (change on week)

Chicago soybeans: 75,490, (-34,152)

Chicago soymeal: 32,666, (-14,082)

Kansas wheat: -3,892, (+824)

Chicago wheat: -40,768, (+7,894)

Chicago soyoil: -43,804, (+3,689)

Chicago corn: -108,089, (-24,728)

Sources: Agrimoney.com, CFTC

As of last Tuesday, managed money held a net short in corn of 108,089 lots, the most bearish positioning on the grain on record, reflecting a jump above 300,000 in the gross short position for the first time.

The net short is equivalent, in crop terms, to more than 500m bushels, or some 13.7m tonnes.

Soy sell-off

However, hedge funds also turned more downbeat on soybean futures and options, cutting their net long position by more than 34,000 contracts to 75,490 lots, the lowest since May.

Speculators' net longs in New York softs, July 30, (change on week)

Cocoa: 44,001, (+868)

Cotton: 61,148, (+1,976)

Arabica coffee: -13,993, (+860)

Raw sugar: -52,244, (+8,065)

Sources: Agrimoney.com, CFTC

But, in remaining net long of 32,666 lots, hedge funds remained exposed to a further drop in prices since.

Speculators reduced their net short positions in soyoil, which have been more profitable bets, and which are often hedged against long positions in soymeal.

'May encourage the bulls'

However, hedge funds nudged higher their net long position on arabica coffee, amid some fears over damage from Brazilian frost to next year's crop, and slashed their net short on New York-traded raw sugar futures and options by more than 8,000 lots.

Speculators' net longs in Chicago livestock, July 30, (change on week)

Lean hogs: 70,350, (+5,645)

Live cattle: 32,795, (-5,451)

Feeder cattle: 1,632, (+2,431)

Sources: Agrimoney.com, CFTC

"Given the market movement, accompanied at times by high volumes, one would have expected a greater degree of short-covering by the speculative community," Nick Penney, senior trader at Sucden, said.

"This still leaves an overall net short by the speculative community which may encourage the bulls," in meaning there is still a large volume of short positions yet to be closed through buying sugar.

'Additional short-covering'

Other contracts on which hedge funds turned less negative included wheat, reducing their net short positions in both Chicago and Kansas City-traded derivatives, amid talk of quality concerns at a time of resilient demand.

"The potential for additional short covering is one of the key supportive factors in the wheat market," Brian Henry at Benson Quinn Commodities said.

"I look for the correction in the wheat market to continue.

"It appears the wheat market can trigger some additional short-covering."

By Agrimoney.com

Twitter Linkedin
Related Stories

KWS beats EU rapeseed stagnation, but falls short in South American corn, soybeans

The German seeds group reports widened losses, as it misses out on growth in Argentine, Brazilian corn and soybean area

Will the correct Argentine weather outlook please stand up

There appears a lack of consensus on what lies in store for the country, just as worries are growing of an imminent La Nina

Morning markets: Palm oil dips. But Dalian corn, sugar rise despite Chinese import growth

Palm oil futures renew their decline, amid India import concerns. Dalian corn, sugar and rubber futures fare better

Evening markets: robusta coffee misses out on pre-holiday cheer

Many markets strengthen into Thanksgiving, including sugar and soybeans, helped by a stronger real. Will volatility reign after the holiday?
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

© Agrimoney.com 2017

Agrimoney.com and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of the Briefing Media group
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069