Hedge funds have, for the first time on record, bet more on falling agricultural commodity prices than rising ones, turning more negative in particular on soybean and cattle prices, and extending short positions in corn too.
Managed money, a proxy for speculators as of August 6 had a net short in futures and options in the 13 major US-traded agricultural commodities for the first time since records began in 2006, according to data kept by the Commodity Futures Trading Commission, the US regulator.
Managed money net long in top ag commodities, (change on week)
August 6: -2,686, (-61,175)
July 30: 58,489, (-47,826)
July 23: 106,315, (-51,532)
July 16: 157,847, (+37,255)
Sources: Agrimoney.com, CFTC
In soybeans, hedge funds slashed their net long position – the extent to which long bets, which benefit when prices outnumber short holdings, which profit when values fall - by nearly 32,000 contracts to 43,580 contracts, the lowest since January last year.
However, hedge funds also extended their net short position in Chicago corn to a record 113,072 lots.
Speculators' net longs in grains and oilseeds, August 6, (change on week)
|Chicago soybeans: 43,580, (-31,910)Chicago soymeal: 23,373, (-9,293)Kansas wheat: +1,865, (+5,757)Chicago wheat: -47,335, (-6,567)Chicago soyoil: -54,516, (-10,712)Chicago corn: -113,072, (-4,983)Sources: Agrimoney.com, CFTC|
"Grains and oilseeds continued to sell off, following improvements in seasonal conditions which are supporting the new crop supply outlook," Rabobank said.
On Monday, Deutsche Bank cut its forecast for corn prices, citing an upgrade to its yield forecast following a Midwest crop tour.
In soyoil, one of the two main products of soybean processing, the net short position increased to 54,516, the second highest figure on record.
The net short in major grain and oilseed contracts overall, including the soybean product, increased to a record 88,397 lots.
Profits on cocoa bets, losses on coffee
In soft commodities, whose prices tumbled largely last year thanks to prospects of improved supplies, hedge funds actually maintained a net long position, of nearly 37,000 contracts, if down some 2,165 lots over the week.
Speculators' net longs in New York softs, August 6, (change on week)
Cocoa: 44,658, (+657)Cotton: 63,446, (+2,298)Arabica coffee: -20,602, (-6,609)Raw sugar: -50,755, (+1,489)Sources: Agrimoney.com, CFTC
However, they raised their net short position in New York arabica coffee futures and options by more than 6,600 contracts, which has proved a less profitable move.
Arabica coffee futures have risen by nearly 4% since Tuesday, lifted by a support package unveiled by Brazil for its growers, including options offering a guaranteed price for beans, and by a tumble in inventories held for delivery against London-traded robusta beans.
Stocks held for delivery against robusta futures fell to 83,770 tonnes as of August 5, from 98,250 tonnes two weeks earlier.
Hedge fund interest
On live cattle futures and options, hedge funds appear to have been wrong footed too, cutting their net long position for a fourth successive week, to its lowest since April, ahead of a recovery in prices prompted by Tyson Foods' announcement of a ban on processing animals fattened with Zilmax.
Speculators' net longs in Chicago livestock, Aug 6, (change on week)
|Lean hogs: 78,028, (+7,678)Live cattle: 23,482, (-9,313)Feeder cattle: 5,162, (+333)Sources: Agrimoney.com, CFTC|
However, the negative positioning on agricultural commodity prices does not bear out talk of reduced interest by hedge funds in the asset class.
Managed money held open interest in more than 1.7m futures and options contracts as of Tuesday, up from 1.42m at the start of the year.