By In contrast to their ongoing bullish position in Chicago corn, speculators have shifted their attention to soybeans for the first time in over a year, signaling a newfound confidence in the commodity, according to a Reuters report.
Investors have been focused on tightening global corn supplies for months.
However, it has recently become clear that soybean stocks may also be lower than expected later this year, according to the report.
CBOT soybean futures experienced a significant surge due to widespread short covering, triggered by an announcement of the US Department of Agriculture on January 10.
Positions
The USDA report revealed that the 2024 US corn and soybean harvests were considerably lower than analyst projections.
Net long position of 34,833 CBOT soybean futures and options contracts was established as of January 14 as a result of this.
This bullish bean view is the first for funds since December 2023 and is a stark contrast to the net short of 28,612 contracts from the week prior, Reuters said.
The most recent adjustment made by the funds in their soybean holdings was primarily driven by short covering, accounting for 71% of the move, according to the report.
However, it’s important to note that they didn’t solely rely on closing out existing short positions.
The funds also took the opportunity to initiate new long positions, adding to their overall bullish stance.
This increase in gross long positions was the most substantial observed in any week since May of the previous year, signaling a potentially significant shift in their investment strategy.
Soybean
CBOT soybean futures experienced a notable 5% increase over the course of the week ending January 14.
However, this upward trend was tempered by a subsequent decline of 1.3% during the last three sessions.
The soybean market is currently experiencing a complex interplay of bullish and bearish factors.
On the bullish side, the recent USDA report indicated smaller. soy numbers than previously anticipated.
Additionally, dry weather conditions in Argentina, a major soymeal exporter, have raised concerns about potential supply disruptions.
Furthermore, there have been some initial hiccups in Brazil’s soy harvest, which could also impact global supply.
These bullish factors have contributed to upward pressure on soybean prices.
However, the overall global soybean outlook remains bearish.
Despite the aforementioned challenges, global soybean production is projected to reach a new record high in 2024-25.
This is primarily due to increased acreage and favorable growing conditions in key producing regions.
As a result, global soybean ending stocks are also expected to reach unprecedented levels.
This abundance of supply poses a significant challenge for soybean bulls.
While short-term price fluctuations may occur due to weather events or other unforeseen circumstances, the overall trend is likely to be downward pressure on prices.
This is because the ample supply will outweigh any temporary disruptions or concerns.
Therefore, while there are certainly bullish factors at play in the soybean market, the overarching bearish outlook due to record production and ending stocks will be a major hurdle for those hoping for a sustained price rally.
Corn
Meanwhile, CBOT corn futures rose 3.6% in the week ended January 14, following the latest USDA reports which placed global 2024-25 corn ending stocks at a decade low, according to Reuters.
The most-active corn contract reached its highest price since mid-December 2023 at $4.85 per bushel on Friday.
This was after a 2.1% increase over the previous three sessions.
Managed money net long position in CBOT corn futures and options contracts reached 292,228 as of January 14, the report added.
This is their most bullish position since May 2022.
Approximately two-thirds of this increase was due to new gross longs.
CBOT corn futures and options open interest saw an 11% jump for the week ending January 14, surpassing 2.37 million contracts.
This is the highest weekly figure since June 2021 and significantly exceeds the average for this time of year, according to Reuters.
CBOT soybean futures and options’ open interest rose 4% in the week ended January 14.
This is the second-highest January level ever, only surpassed by 2021.
However, the latest 1.05 million contracts figure is down almost 18% from October’s recent peak, Reuters said.
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