Spooked by tariffs, funds purge bullish corn bets in near-record style: Braun

(The opinions expressed listed here are these of the creator, a market analyst for Reuters.)

NAPERVILLE, Illinois, March 9 (Reuters) – An imminent commerce warfare between the US and its two largest agricultural buying and selling companions despatched bullish Chicago corn speculators operating for the hills final week.

However only a few bears had been made from the ordeal.

On Thursday, U.S. tariffs in opposition to most Mexican and Canadian items had been postponed till April. Nonetheless, the levies had gone into impact on Tuesday and the market response was harsh, particularly with Mexico the highest vacation spot for U.S. corn.

Most-active CBOT corn futures plunged 8.6% within the week ended March 4, their greatest such downturn since mid-2023. Cash managers in the course of the week slashed their web lengthy in CBOT corn futures and choices to 219,752 contracts from 337,454 per week prior.

Weekly web corn promoting close to 118,000 contracts was the second-largest ever, behind the 147,000 contracts offered in the course of the week ended February 28, 2023. However final week’s discount in gross longs, which exceeded 100,000 contracts, was by far a document.

On common, funds’ greatest web promoting weeks in corn are considerably evenly break up between exiting longs and new quick positions. An unusually low 11% of final week’s transfer owed to new gross shorts, suggesting that the selloff was extra risk-off in nature somewhat than a genuinely bearish vote.

Within the periphery of the week’s occasions, the U.S. Division of Agriculture predicted robust 2025 U.S. corn plantings and thus a restoration in home provides, although that had been largely anticipated. South American corn crop outlooks have additionally not too long ago improved.

However accessible international corn provides are traditionally skinny, particularly in Brazil the place shares are the lightest in over 20 years. Demand has persevered within the meantime, pushing buyers to construct their bullish corn stance after forging a document bearish one final 12 months.

Speculators had been additionally hefty web sellers in wheat and the soy complicated in the course of the week ended March 4, however in contrast to in corn, new quick positions drove these strikes.

Cash managers ditched their web lengthy in CBOT soybean futures and choices, flipping to a web wanting 35,487 contracts versus a web lengthy of 8,209 within the prior week. Funds’ bullish stint in beans lasted simply seven weeks, and web promoting within the newest week was the strongest since final June.

Most-active CBOT soybeans fell practically 5% by March 4, whereas soymeal eased 3% and soyoil plunged 7%. Funds erased a lot of their web lengthy in CBOT soybean oil futures and choices, which dropped to 9,669 contracts from 43,052 per week earlier.

Their web quick in soybean meal futures and choices reached a 10-week excessive of 85,344 contracts versus 63,193 within the week earlier than, nearly completely the results of new gross shorts.

In CBOT wheat futures and choices, the doorway of latest gross shorts was the heaviest for any week since 2017. Cash managers additionally added a handful of gross longs, although the web quick grew to 82,399 contracts from 67,614 per week earlier.

To date this 12 months, funds’ bearish wheat bets and bullish corn bets have been traditionally out of sync, although final week’s epic corn selloff pulled issues nearer to regular territory.

Nonetheless, corn futures rallied practically 4% over the past three periods with the delay of U.S. tariffs on Mexico and Canada. Different positive factors had been as follows: soybeans 2.6%, wheat 2.7%, soymeal 3.7% and soyoil 1.4%.

This week, the commerce will probably be waiting for the U.S. Division of Agriculture’s month-to-month provide and demand report due on Tuesday. Giant modifications usually are not anticipated, although the company might issue tariff impacts into its estimates if deemed essential. Karen Braun is a market analyst for Reuters. Views expressed above are her personal.

(Modifying by Himani Sarkar)