Weekly COT Highlights
There’s a new graphic for you this week, and likely every week moving forward. Immediately below we’ve added the Index Fund Tracker. Because index funds are long only, typically do not move as many bushels as the large specs, and in large part do the same thing as the large specs, we don’t include them on the individual COT charts. Their weekly change is posted but not graphed, it gets too busy. But particularly in the case of corn right now, they deserve a good look. As you can see, Index Funds are in the midst of their largest buying spree in history, now sitting just 22,000 contracts from their largest all time long position size from early 2022. We’ve many times detailed the bull case in corn, in the greatest detail in this week’s lead story, so it remains to be seen if they continue buying up to and past their previous net long. As you can see above, they are far from their record holding levels on a combined basis of corn, soybeans and wheat, so perhaps they will bet the same amount as before, but put more chips on corn this time.
- Index funds and large specs continue piling into corn aggressively, and beans less enthusiastically
- Index funds and large specs apparently have no interest in SRW
- Specs continued to buy live cattle, likely liquidated some longs Wednesday-Friday
Corn
You can see the numbers below. Aggressive spec buying continues. As mentioned above, funds are in the midst of their most aggressive buying spree in history. The commercial position collapsing is an indication that farmer selling on this rally has been very significant.
Specs have been buyers of 529,300 contracts since July, and are still 227,138 contracts shy of their largest all time net long from early 2021. This continues to happen through both new longs and short liquidation. All positive signs for prices still.
Soybeans
Large speculators extended their long position this week, which is a positive. The negative is that they did so by liquidating shorts father than liquidating longs. We still have not seen any interest from the specs in actually BUYING soybeans since late growing season weather concerns.
On the flip side, index funds hold their largest long position in soybeans since July of 2022. As in the case of corn, it will be interesting to see how managed money responds to the tariff threats, or reality, as we enter next week and get a print on Friday that shows trading activity through next Tuesday.
Wheat
Large specs returned to selling this market through long liquidation and new short position building, index funds hold a historically small long position, and commercials are near record net long.
This is a bullish market setup. Technically, futures have broken trendline resistance and contract lows appear to be significant support. Slow Russian wheat exports as discussed in national new in this weeks Brock Report is a supportive factor as well. This is not a time to be selling wheat.
Cotton
Large specs are challenging their all time record net short, and given price action since Tuesday, we would be surprised if they don’t establish a new record in next weeks print. Kicking the horse: fundamentals for this market are terrible, the tariff announcement on China doesn’t help as they are the largest global importer of cotton, this COT remains a very bullish setup. Something will need to spark buying though, and at this point it seems more likely that we will get bullish surprises than bearish ones. All that said, new contract lows were established across all contracts Friday.
Rice
An ugly week of price action despite buying from large speculators. We’ve debated on this page whether specs really drive the rice bus, as history shows a minimal correlation in this market compared to others. Contract lows did hold this week. We remain patient on marketings and continue to expect higher prices ahead.
Soybean Meal
Large specs have not done much buying or selling for the last 3-4 weeks, and prices haven’t moved much either. The COT setup remains bullish, but fundamentals remain bearish as crush continues to be very strong. Monday the USDA will release it’s monthly Grain Crushing and Fats & Oils after the market closes so be sure to see the afternoon commentary for an update.
Lean Hogs
Another market where fundamentals and the market setup are at odds with each other to some degree. The COT setup is very bearish because large specs hold such a sizable net long position. On the flip side of that, it’s been 3 weeks since they made and sizable reduction to their longs, and they have not yet begun selling this market at all. Supportive fundamentals are keeping them long and will continue to do that, until they don’t. We still believe when this market breaks it will break hard. Retaliation to tariffs may be the spark, but Friday’s price action while somewhat weak, is probably better described as ‘cautious.’
Cattle Complex
The never ending bull market… We had to change the price scale on our charts below to fit last weeks price surge. Having been on the road and talking with a lot of producers, this market feels like it is in the “Euphoria” stage typically associated with blow-off tops. Today at 2pm the January Cattle Inventory Report was released, the first such report in a year, and while there was no clear market consensus heading into the report, our initial reaction is that this is a bearish report.
We established significant hedge protection Wednesday this week, right before the selloff, on anticipation of long liquidation ahead of the report, and the aforementioned “euphoria.” Monday will likely be enough to let us know if we will be happy we did so.
Regarding the COTs through Tuesday, speculators continued buying live cattle, and actually liquidated shorts. Feeder cattle specs did not adjust their positions much at all.
