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– Speculators sold more Chicago corn contracts than expected last week, marking their first bearish stance on the crop in nearly seven months.
On the other side of the ledger, however, their hefty short position in soybean meal, combined with growing bets on rising soybean oil prices, pushed what is known as the "oil-share spread" to a record level of optimism.
According to the Reuters Tariff Watch daily bulletin, which tracks trade and tariff news, July corn futures fell to a seven-month low in the week ended 13 May, dropping nearly 3%. The US corn planting season is progressing smoothly, and speculators were expected to turn to selling ahead of Monday's US Department of Agriculture reports.
Indeed, the data showed that US corn supplies for the 2025-2026 season will be lower than analysts had forecast, though still 27% higher than in the current season.
In the week ended 13 May, money managers sold nearly 99,000 futures and options contracts in corn, resulting in a net short position of 84,976 contracts — the first net short position since October and the most bearish stance since then.
This marked a sharp reversal from February, when money managers' net long position hit a three-year high of 364,217 contracts. Since then, investors have sold corn in 12 of the past 14 weeks, driven by concerns over US trade policy and expectations of a record US harvest.
While July corn futures held steady towards the end of last week, December contracts fell to a five-month low on Friday.
Money managers also extended their net short position in wheat contracts to 126,895 contracts, nearly their most bearish stance in more than seven years.
Active wheat futures fell on 13 May to their lowest level since August 2020, after the USDA projected a slight increase in global supplies through 2026.
However, July contracts rose 1.5% over the last three sessions, boosted by one of the strongest US wheat export figures in recent years, along with improving US crop conditions.
In the week ended 13 May, money managers raised their net long position in soybean oil contracts to a six-month high of 67,432 contracts, an increase of nearly 11,000 contracts over the week.
Active futures rose 6.5% over the week to reach an 18-month high on Wednesday, driven by proposals to extend the Clean Fuel Production Tax Credit (45Z) through 2031.
However, contracts fell 6.5% over the following two sessions, including a sharp drop on Thursday, following rumours that the targeted US biodiesel volume for next year could be lower than expected.
Behind the scenes, price spreads between soybean products were widening. The "oil-share" index — which measures soybean oil's share of product value — rose to its highest level since late 2022.
However, speculators' optimism on the oil-share index reached an all-time high last week, which may suggest that their positions in one or both products have become overextended.
Investors trimmed slightly their record short position of more than 100,000 contracts in soybean meal, but this was offset by heavy buying in soybean oil, pushing their net oil-share position to 170,177 contracts, surpassing the previous record of 144,631 contracts.
The movement of actual soybean contracts during this period tracked soybean oil closely. Investors raised their net long position in soybean contracts to a three-month high of 38,407 contracts, an increase of more than 16,000 contracts over the week.
Outlook For Next Week:
Traders will closely monitor US weather forecasts over the coming week to assess the start of the corn and soybean planting season.
They will also follow developments in trade policy and environmental regulations related to biofuels in Washington, which have had a strong impact on futures markets recently.
Source: Reuters