Monday, July 25, 2016

Futures: "Hedge funds sell ags again - but wheat shorts 'in trouble'"

Last Chg
Corn 340-4-1-2
Soybeans 973-4-14-6
Wheat 428-2+3-0

From Agrimoney:
Hedge funds extended their cut in bullish positioning on agricultural commodities to the longest of 2016, although ideas grew on wheat at least that the extent of short bets may not be sustainable, boding well for prices.
Managed money, a proxy for speculators, cut its net long position in futures and options in the top 13 US-traded agricultural commodities, from cotton to cattle, by 56,935 contracts in the week to last Tuesday, analysis of data from the Commodity Futures Trading Commission regulator shows.
The reduction in the net long – the extent to which long bets, which profit when values rise, exceed short holdings, which benefit when prices fall – was the fifth successive weekly decline, a feat not exceeded since summer last year.
And the decline, which took the overall net long below 500,000 lots for the first time in three months, reflected a further drop in bullish hopes on grain prices – although this week the trend of ramping up long bets in New York-traded soft commodities ground to a halt.
Net short in corn
In grains, the selldown was again led by the closure of long bets in corn, as worries have eased over the threat of weather setbacks to Midwest crops.
ndeed, hedge funds turned net short on Chicago corn futures and options for the first time in three months.
However, the decreased optimism over grain prices was also reflected in a further increase by speculators in their net short position in Chicago soft red winter wheat, to 116,606 contracts, the largest on records going back to 2006.
The extent of the bearish betting - which was also reflected in an increase in the net short in Kansas City hard red winter wheat to a three-month high – strengthened ideas that appetite for such positions may be spent, especially given that prices are already close to 10-year lows.
'Wheat short may be in trouble'
Such thinking has only gained further strength from the growing concerns over the French wheat harvest, the biggest in the European Union, but where persistent rains have harmed both the quantity and quality of the crop...