Monday, February 20, 2017

Futures: "Hedge funds hike bullish ag bets - spurring fears of grains selldown ahead"

We may be approaching the wilderness of mirrors where we become contrarian to the contrarians.
Of course that way lies madness but it might be profitable.
But not yet (it's a holiday until this evening)

Last Chg
Corn 375-4s-5-4
Soybeans 1043-2s-11-4
Wheat 455-4s-5-6

From Agrimoney, Feb. 20:
Hedge funds hiked their bullish bets in agricultural commodities near to the highest in nine months, led by a buying spree in grains – which commentators cautioned could herald revived selling pressure.
Managed money, a proxy for speculators, boosted its net long position in futures and options in the top 13 US-traded agricultural commodities, from corn to sugar, by 118,149 contracts in the week to last Tuesday, analysis of data from the Commodity Futures Trading Commission regulator shows.

The increase in the net long – the extent to which long positions, which benefit when prices gain, exceed short bets which profit from price falls – left it at 796,016 lots, its highest since June last year and more than twice the levels heading into 2017.

The purchasing reflects a broadly more positive view of commodities, as investors bet on a recovery in inflation, to which raw materials are seen as offering some exposure.
"Funds have been situating themselves in long 'inflation' bets," said Water Street Solutions.
"But the fundamentals will need to catch up to their position," the ag advisory group added, in comments which some investors saw applying in particular to grains, which have seen prices buoyed by a wave of short-covering, which some commentators see as not proportionate to changes in world supply and demand factors alone.
'Negative for prices'
Indeed, in the latest week, hedge funds hiked their net long in grains, including the soybean complex, by 140,726 contracts – the biggest buying spree in nine months – to 378,611 lots
The purchasing was led by corn, in which managed money raised its net long by more than 56,000 contracts to a seven-month high of 85,360 lots,
Investors "bought well more contracts than expected in corn", said Terry Reilly at broker Futures International, a factor which could be viewed as a negative for prices in implying more buying pressure had been fulfilled than had been thought....MORE