Chicago corn and wheat futures took a hard spill last week amid potentially positive developments for Black Sea exports and planting progress for delayed U.S. crops, but speculators did not sell as heavily as projected.
In the four-session week ended May 31, most-active CBOT wheat futures fell nearly 6%, hitting three-week lows. Most-active corn shed 2.4% and notched two-month lows.
During that week, money managers cut their bullish position in CBOT corn futures and options by 22,505 contracts, and the resulting net long of 268,964 contracts is their least optimistic since October.
Data from the U.S. Commodity Futures Trading Commission on Friday also showed money managers sold 7,230 CBOT wheat futures and options contracts through May 31, paring their net long to 15,024 contracts.
Trade sources had pegged commodity funds’ selling in CBOT corn and wheat futures at 39,000 and 23,000 contracts, respectively, though recent trading volumes have not been strong and open interest in wheat remains particularly low.
Other reportable speculators have modestly bought corn for the past three weeks and commercial end users have reduced their historically elevated gross corn shorts in five of the last six weeks. Index traders have eased both corn and wheat positions in the latest two weeks.
Moscow told U.N. officials and Senegal’s president on Friday that it was willing to free up blocked Ukrainian grain exports, though it blames Ukraine and the West for the problems. Russia will hold talks with Turkey on Wednesday over facilitating Black Sea exports.
Discussion was frequent last week about the potential increase in Ukraine’s corn and wheat exports, which have been very minimal since late February. Moscow previously requested sanction removals for the Ukrainian export deal, though the West has not agreed to such terms, and it is unclear if Russia is sticking to those conditions.
Traders’ corn supply worries also ebbed as a decent corn planting pace in the last couple of weeks following a very slow start has prevented a disaster scenario like 2019.
CBOT wheat last Tuesday ended down the daily trading limit and both wheat and corn followed through on Wednesday, violating some key technical levels that could signal a downtrend in prices.
Most-active corn on Wednesday dipped below the 100-day moving average for the first time since Oct. 28. On the same day, wheat traded fully below its 50-day average for the first time since May 3, though that had been the only instance since early February.
Corn futures barely stayed above the 100-day through Friday and wheat continued to trade below the 50-day. Corn lost another 3.5% in the last three sessions and wheat dropped 4.4%.
Most-active soybeans continue to trade above their moving averages, gaining nearly 1% in the last three sessions. That followed a 0.6% fall in the week ended May 31, though money managers added about 1,500 soy futures and options contracts to their net long, which reached 164,630.
Investors are waiting to see how U.S. soybean planting finishes, especially in North Dakota where efforts are record- slow. A drier forecast for the northern state over the next week or so should allow farmers there to get some decent work done, though possible acreage shifts across all crops are still unknown.
Rapid selloffs are always a risk when speculators are really long, but selling has never been too quick when prices are elevated and funds are as bullish as they are today. The largest multi-week selloffs in corn, for example, occurred at various points between 2015 and 2019, when prices were relatively low. Karen Braun is a market analyst for Reuters. Views expressed above are her own.
