Monday, October 10, 2016

"Hedge Funds Hike Net Short in Wheat to Record Top - Boding Well for Prices?"

Last Chg
Corn 343-0+3-2
Soybeans 957-6+1-0
Wheat 402-4+7-6

A twofer from Agrimoney. First up:

Hedge funds hike net short in wheat to record top - boding well for prices?
Hedge funds, deterred by data showing the biggest US wheat stocks in 29 years, turned their most bearish ever on Chicago wheat futures and options – ironically, raising hopes of support for prices of the grain. 
Managed money, a proxy for speculators, raised by a modest 3,959 contracts its net long position in futures and options in the main 13 US-traded agricultural commodities in the week to last Tuesday, according to data from the Commodity Futures Trading Commission (CFTC) regulator. 
However, the marginal change in the overall net long - the extent to which long positions, which benefit when prices rise, outnumber short bets, which profit when values fall - hid some more marked changes in holdings in individual commodities. 
In Chicago soft red winter wheat futures and options, the world benchmark, hedge funds raised their net short by 20,000 lots – the biggest selldown in three months. 
That took the net short to 151,417 contracts, by a distance the biggest on records going back to 2006....MORE

Grains: ...Dryness Fears, Huge Fund Short Lift Wheat Prices
So just how worrying are the dryness prospects facing some northern hemisphere winter wheat crops? on Friday highlighted that sowing conditions, for crop to be harvested in 2017, were raising some concern in parts of the Black Sea, of the European Union, and of the US.
The weekend brought some relief to one of those areas.
"The driest western areas of the Ukraine got some useful rain and might still get more early this week," said Tobin Gorey at Commonwealth Bank of Australia, if adding that "the dry Russian regions will miss out on both".
'Hesitating to sow'
Meanwhile, in the European Union, Agritel highlighted the weather setback behind a slow sowings pace for winter grains in France, the bloc's top wheat producer, where farmers had as of last week planted 6% of wheat, compared with 17% a year before.
For winter barley, seedings had reached 10%, compared with 27% a year before,
"Due to the very dry conditions in a good part of France, producers are hesitating to sow the winter crops, as germination will not happen before precipitation," Paris-based Agritel said.
There are worries in some eastern EU countries, notably Romania, too.
'Clock is ticking louder'
As for the US, CBA's Mr Gorey said that "the dry western parts of the US hard red winter wheat region received only modest rainfall on small patches over the weekend," adding that "forecasters expect the dry weather to continue.
"Soil moisture more likely to decline than anything else over the next week. The clock is ticking louder for the US hard red winter wheat crop."
Of course, it is still early days in the growing season, and some US wheat growing areas have more than enough moisture.
(Indeed, further north in Canada it has been excess rainfall which has been the problem, slowing the last stages of the wheat harvest and threatening quality damage to ripe crop.)
'Looks supportive'
However, if investors had any doubts about the wisdom of putting risk premium into prices yet, they may have found extra cause in data released late on Friday showing that hedge funds held a record net short of 151,417 contracts in futures and options in Chicago wheat, the world benchmark....MORE