Hedge funds showed some poor timing in the corn markets, by selling shorts ahead of last week’s big sell-off, while speculators are still pumping up the size of their net-long on sugar, data from the Commodity Future’s Trading Commission showed.
In the week to March 29, managed money, a proxy for speculators, trimmed their net-short in Chicago corn futures by 46,136 lots, leaving them short by just 108,433 lots, weekly data from the CFTC showed.
This leaves managed money the least bearish on corn it has been since early February.
Bad timing
The bullish move will have left some speculators out of pocket, coming as it did ahead of a rapid sell-off in corn markets.
As Brian Henry, at Benson Quinn Commodities put it, “their timing wasn’t very good”.
US corn futures turned sharply lower on Thursday last week, after a report from the US Department of Agriculture showed farmers planning much larger corn plantings than expected.
On March 31 corn front month corn futures dropped more than 4.2%,
Meanwhile, speculators turned positive on Chicago soybeans, to the tune of 21,768 lots, leaving a net-long of 75,450 lots.
This is the most bullish speculators have been for 8 months.
Sugar surprises speculators
In sugar speculators actually upped the size of their net-long position over the week to Tuesday, even as prices fell, where most analysts were expecting a bearish move.
The size of the speculative net long reached its highest level so far this year, although at 163,271 lots it still falls short of the 182,391 lots seen back in early December.
“The Commitment of Traders report showed that, despite lower prices, their appetite for increasing longs had not abated I the week till last Tuesday,” said Nick Penney, at Sucden Financial.
“This buying was largely absorbed by new selling from the commercial sector,” he noted.
Selling pressure
Robin Shaw, at Marex Spectron, called the size of fund buying “a big surprise”.
The size of the net-long is bearish for prices, as it leaves little room for further speculative buying, and plenty of room for selling.
And with prices sharply down since Tuesday, Mr Shaw said the evidence “makes one assume that these funds will continue to get out of their massive longs”.
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