COLUMN-Funds ink all-time bearish soybean bets off unprecedented selling streak -Braun

Credit: REUTERS/Agustin Marcarian

By Karen Braun

NAPERVILLE, Illinois, March 10 (Reuters) - Speculators have been selling Chicago-traded soybeans since mid-November, and that finally culminated in a record position last week as global stockpiles swell.

In the week ended March 5, money managers lifted their net short position in CBOT soybean futures and options to a record 171,999 contracts from 160,653 a week earlier. That replaced the prior all-time net short of 168,835 contracts from May 2019.

The move came despite a fractional gain in most-active soybean futures Sv1 during the week, which included fresh 3-plus-year lows. That marked funds' 16th consecutive week as net sellers of CBOT soybeans, well past the prior record streak of 10 weeks.

The last time money managers staged such a significant soybean sell-off was in May and June 2018 when the U.S.-China trade war started, though the 2018 sell-off happened much faster.

The week ended March 5 was funds’ 14th of the last 15 weeks as net sellers in CBOT soybean meal, as their net short expanded by nearly 2,000 contracts to 49,526 futures and options contracts. That is money managers’ most bearish meal view since June 2020 and most bearish ever for early March.

Their net short in CBOT soybean oil is also record for the date, and it expanded by more than 10,000 contracts in the week ended March 5 to 62,473 futures and options contracts. That is their most bearish oil stance since May 2019.

Most-active meal futures SMv1 had climbed 1.5% in the week ended March 5 while soybean oil BOv1 shed just over 1%.

Funds’ soy complex pessimism is near all-time highs, and the only other time it was anywhere close in intensity was April and May 2019. The combined managed money net short across soybeans and products totaled about 284,000 futures and options contracts as of March 5, just short of the May 2019 peak of 289,000.

Expanding global soybean stocks and questionable Chinese demand have weighed on soy prices for months. Top exporter Brazil’s soy crop should be sufficiently large despite significant weather challenges earlier in the season, and the harvest last week reached the halfway mark, meaning those supplies are now hitting the market.

Brazil’s second corn crop is just now being planted, though U.S. corn supplies later this year are set for a massive expansion versus the prior year. Ukraine’s corn shipments are surpassing expectations, as the U.S. Department of Agriculture on Friday raised Ukraine’s export outlook for a second straight month.

Most-active CBOT corn futures Cv1 drifted fractionally higher in the week ended March 5, though money managers were slight net sellers of the yellow grain, bumping their net short to 296,795 futures and options contracts from 295,258 a week earlier.

CBOT wheat was by far the biggest loser in the week ended March 5, as most-active futures Wv1 tumbled nearly 6%. Money managers were net sellers of more than 9,200 contracts, expanding their net short to 65,539 futures and options contracts. Funds’ CBOT wheat views have not drastically shifted for three months.

CBOT corn, soybeans and soybean products may have found a temporary bottom last month. In the last three sessions, meal gained 3.5%, corn added 3.2%, soybeans were up 3% and soyoil added 2.5%. Corn on Friday hit one-month highs, soyoil three-plus-week highs, and beans and meal touched the highest levels in over two weeks.

But wheat continued its poor showing, dropping 2.4% between Wednesday and Friday. CBOT wheat did notch decent gains on Friday, though not before printing the lowest price since August 2020.

Friday’s price action was against the backdrop of a monthly USDA report, which came in mostly as expected, though many analysts were disappointed with the relatively small cut to Brazil’s soy crop.

Karen Braun is a market analyst for Reuters. Views expressed above are her own.

Graphic- Managed money net position in CBOT soybean futures and options https://tmsnrt.rs/49VJOY2

Graphic- Managed money net position in CBOT soybean meal futures and options https://tmsnrt.rs/438cM4y

(Writing by Karen Braun Editing by Matthew Lewis)

((karen.braun@thomsonreuters.com; X: @kannbwx))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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