Funds Continue to Sell Grains
Nov 29, 2011
· Grains mixed to higher overnight after yesterday’s bounce; Outside commodity markets somewhat supportive with $US down again
· Winter wheat rated 52% good-excellent vs. 50% last week; USDA issued no harvest progress report for corn despite delays in the ECB
· CFTC Commitment of Traders Report
o Funds cut longs in corn by 47k to 83k; Increase net short in wheat by 12k to 87k; Increase net short in soybeans by 18k to 24k
· Funds now holding smallest long in corn since July; Short wheat position biggest in 6 years;
· USDA Risk Management Agency announced that US producers will pay 7% less for crop insurance on corn and 9% less on soybeans on average in 2012; New rates reflect updated system and methods of setting rates
· Bill to scrap the Canadian Wheat Board monopoly has advanced; Farmers would be able to forward contract wheat if passed; CWB has done marketing for all Canadian wheat for 60 years
The short fund position in wheat is becoming over-extended in our opinion. We look for a significant short-covering rally at some point during in the 6-8 week period. Fund traders clearly exhibiting a bearish attitude towards the ag markets despite massive price break. Many corn producers now looking at Dec ’12 contract. We look for a rally back to the $6 area after the new year.
Straits Financial does futures/options brokerage for farms, feedlots, elevators and processors. Call Joe Vaclavik at (312) 462-4438.