Funds Short Soybeans, Grain Slump...
Nov 21, 2011
· Grains sharply lower overnight; Follow-through selling and negative outside market combining to push corn, soy and wheat past Friday’s lows
· Corn exports, which account for only 13% of US corn demand, hit a 13-month low on Thursday leading many to believe that US corn is overpriced on the world market
· Managed money (“the funds”) cut net long position in corn by 18k contract to 130k in week ending Nov 15;Funds now net-short soybeans for the first time 16 months, net-short about 5k; Increased net-short in wheat by 9k to 75k contracts; Index (“long only”) funds remain heavily long corn, soy and wheat
· Funds apparently now with the lightest long positions in “ag” commodities since summer of 2010
· Cattle on Feed: On Feed 104% (104% avg estimate), Placements 99% (99.2% avg estimate), Marketed 103% (101.4% avg estimate)
· Super Committee failure to agree on debt plan being blamed for weak outsides this morning; Crude, Gold, Silver, Equities all sharply lower with $US marginally higher
Dec corn looks poised to test recent lows at 5.72 ¼ if there is a close below 6.00 this week. Funds clearing pressing the soybean market despite some China export business. Dec ’12 corn just a few cents away from lows near 5.50. Whatever the reason for the break, it shouldn’t be surprising that markets are slumping in the month of November. We look for a post-harvest rally at some point, timing is difficult. Call options have become cheap, use a defined-risk trade if attempting to be long.
Straits Financial does futures and options brokerage for farms, feedlots, elevators and processors. Call Joe Vaclavik today to be added to a Free Trial of the full-version of the AM Grain Update. (312) 462-4438 or jvaclavik@straitsfinancial.com
