Friday, October 14, 2016

A Hard Frost and Corn, Wheat Futures Soar Anew, as Funds Ditch Bearish Bets

As foretold by the prophesy:

March 8
ABN Amro Says Grain Prices Have Bottomed After Four Year Decline

We think ABN are early, there is just so much stuff around although we expect some late summer La Nina weather to give us a long trade.
And a week later when we laid out the 14-word investment thesis:
We're looking for a drift down into late summer, then a weather related boost....  


Last Chg
Corn 356-6+7-2
Soybeans 966-4+10-2
Wheat 424-0+8-0

From Inside Futures:

First Hard Frost Triggers Fund Buying
After the Grain reports on Wednesday that ended in a dismal close leaving bearish overtones Mother Nature casts yet another weather event in this crazy weather we have been realizing with the effect of El Nino and La Nina to come. Although this is not the earliest frost in history so-called record acreage that drove prices down where the first winter weather scare brought in the funds to buy value. In the overnight electronic session the December Corn is currently trading at 353 ¾ which is 4 ¼ cents higher. The trading range has been 355 ¼ to 348 ¾....
And from Agrimoney:
Wheat and corn futures soared for a second session, amid talk of hedge funds scrambling to close loss-making short positions, with decent US export sales data, and talk of Chinese demand for wheat fuelling the surge.
Wheat futures for December stood 2.6% higher at $4.26 ¾ a bushel in late deals in Chicago - taking gains over two sessions to 7.6%.
Corn futures for December jumped 2.4% to $3.58 a bushel, up 6.2% since Wednesday's close.
The gains were attributed to a rushy by hedge funds to close net short positions - a spree some investors had warned about at the start of the week after data showed the net short in Chicago wheat at a record high, and that in corn at elevated levels too.
Extreme net short, or net long, holdings are viewed as raising questions over whether there is further appetite for such bets, and as leaving the market vulnerable to price spikes if investors are tempted to close positions en masse.
"Funds have been massively short corn and wheat and they are getting out," said Darrell Holaday at US broker Country Futures.
Technical factors
The temptation to close short bets was viewed as being spurred in part by technical factors, and signals such as corn breaking through a $3.50-a-bushel level which had been seen as a key chart barrier.
Chicago wheat futures for December closed the last session above their 50-day moving average for the first time in nearly four months.
"The corn market seems to now have its eyes turned more towards technical trade rather than [big US] production numbers," said broker CHS Hedging.
"The very structure of this market - big fund shorts - makes a run to the $3.60-3.70 a bushel area seem plausible."
'Room to roam higher'
In wheat, "demand and fund short covering has the market poised to post its biggest weekly gain in almost a year," CHS Hedging said.
"Wheat has slumbering for so long it is hard to see too much of a run but a respite from the malaise we have been in is welcomed."...MORE