Monday, June 19, 2017

Ag Futures: "Hedge funds, wrong-footed by grains rally, 'swallow losses'"

Last Chg
Corn 379-4-4-4
Soybeans 941-2+2-2
Wheat 467-6+2-4

From Agrimoney:
Hedge funds slashed their bearish bets on agricultural commodities, appearing to swallow hefty losses, as dryness fears for grain crops boosted prices and wrong-footed speculators.
Managed money, a proxy for speculators, cut its net short position in futures and options in the top 13 US-traded agricultural commodities, from corn to sugar, by 176,502 contracts in the week to last Tuesday, analysis of data from the Commodity Futures Trading Commission regulator shows.
The cut in the net short position – the extent to which short holdings, which profit when values fall, exceed long bets, which benefit when prices gain – disguised an astonishing divergence in sentiment towards grains and New York-traded soft commodities.
While in soft commodities, hedge funds extended their net short position to the highest in more than two years, in grains, including the soy complex, they chopped their net short position by more than 200,000 lots for only the second time on data going back to 2006.
Prices recover
The short-covering came against a backdrop of rising prices, amid growing concerns over dryness hurting threatening wheat yields in Australia, the European Union, Ukraine and the US, while undermining hopes too for US corn yield potential.
And the position-closing appears to have spelled losses for many hedge funds, which had built their short bets in grains over April and May amid expectations at the time of another benign year of grain-growing weather, spelling further rounds of price falls.
However, with July Chicago corn futures during the week hitting their highest since February, and staying well above mean levels as indicated by major moving average lines, the short-closing would appear to have spelled heavy losses.
In wheat, holders of longer-term short positions may have been able to walk away with some profit, but not those having taken out bearish bets within the last month.
'A lot of people sore'
"There are a lot of people sore out there, because of the losses," a US grain investor told