PM Comments February 23, 2108
Friday, February 23, 2018, 4:02 PM
Submitted by: Landus Cooperative
Sideways / lower trade for corn this week as March Futures lost 1.25c since the Sunday night open. The story is the same from last week with Argentina weather still supportive to our soy complex and, by proxy, the corn market. An interesting development today – rumors of some business flipping from Argentina to the US were circulating, giving both soybean futures and futures’ spreads a firmer tone. We have some substantial ending stocks numbers to chew through, but this is a start. All-in-all, the soybean market was able to tack on 14c this week.
The CFTC Commitment of Traders report showed the funds flipping from short to long this week, netting a long position of 18k contracts. Funds added 56k contracts to their long in soybeans, netting a 99k contract long. This encouraging to flat price strength as fund managers have taken a large short position and turned it into a small net long position. In corn, this is to be met with caution as a +220k short turned into a 18k long in less than 30 days. Over the same period, corn futures have rallied about 15c. Just an anecdotal comment – one would have expected a more substantial rally with such a large move in fund positions.
Regardless of where we think prices may go, the current strength has given good opportunities to price both old crop and new crop corn & soybeans. We are moving into the season of “too’s” – too hot, too cold, too wet, too dry… It’s important to be ready to seize opportunity if / when it presents itself. As a final comment of optimistic caution - like we’ve seen with past rallies (especially when driven by fund buying), market strength can dry up very quickly.
Have a great weekend!