Weekly COT Highlights – Week Ended Tuesday, May 26
Main Takeaways this Week
- Fund length in CBW complex continues to expand, as bean buying accelerates into new record length.
- Specs are losing interest in being long in corn beans and wheat, significant sellers this week
- Soybeans, Meal and Oil: Real warning signs correction is coming for whole complex.
- Corn: three consecutive weeks of selling pressures prices.
- Cotton: Worrisome setup could continue to push prices lower.
Corn
There’s no question now, specs have turned into sellers. This is their third consecutive week of net selling, totaling nearly 120,000 contracts over this time frame and pressuring prices lower in the process. They’ve done so through both long liquidation and, unfortunately, sizable new short position building. This was somewhat predictable, as their buying stopped right were it did last February, net long roughly 200,000 contracts. Whether they continue to pressure the market likely has a lot to do with growing season weather, which looks good at the moment, and planted acreage, which is anyone guess headed inot June 30th. Bottom line is it does not look good for corn in the short term.
Soybeans
Specs have also been soybean net sellers for three consecutive weeks, totaling over 50,000 contracts. Similarly, specs still hold a relatively large long position and have plenty of powder to liquidate. Specs were also sellers of soybean oil and soybean meal this week. We’ve been warning for weeks that when the specs turn bearish the soybean complex things could get ugly. Prices have not yet turned south, in fact soybean oil is out to new contract highs, but I think what we are seeing here is the first real warning sign that a long liquidation correction is likely coming, and soon.
Wheat
Lot of congestion and a total lack of direction in SRW. The second chart below shows specs were aggressive sellers of HRW, and may be done betting on the short crop. Futures certainly have taken a massive hit the last week and a half, and we would expect specs to continue to liquidate their longs and return to a more sizable short position. More weakness in prices likely lies ahead.
Cotton
The spec buying that drove prices higher appears to have officially ended, right where is did back in 2024, at roughly 75,000 contracts long. Futures have taken a dive over recent weeks, and specs are doing what you would do if you held long positions…get out. They have a long way to go to get back to neutral territory, making this a very concerning setup for cotton bulls.
Rice
Really aggressive spec buying continues for the fourth consecutive week, though at a slower pace this week. Futures have rallied quite a bit, presenting a great marketing opportunity that we have taken advantage of with several sales, including late this week before Friday’s sell off. Given the specs return to long territory, though they are not over extended, we would suggest that you catchup on marketing as the potential for a bounce back lower looks very possible.
Soybean Meal
Specs were modest sellers this week, and like soybean oil and to some extent soybeans, this is the classic “watchout below” setup: specs very long and commercials very short. Buyers should absolutely be hand to mouth on meal purchases.
Lean Hogs
This is one of the most reliable COTs to follow. Prices have continued to drift lower with spec selling, but at this point specs are approaching long term lows with respect to historical net shorts. There are no signs yet that the futures drift lower is done, but in the coming weeks we feel that it will be and this setup will be squarely in “supportive” territory.
Cattle Complex
The fat cattle setup here is quite concerning. Specs were net sellers of over 10,000 contracts this week, making it three consecutive weeks and their second largest week of net selling since October. Futures are still at very elevated levels and just ~$10 off contract highs. A good place to establish price protection. If you’ve been looking for a push to do so, here it is.
In the case of feeders, specs have been able to have their cake and eat it too. They’ve been very long, and over the last few weeks they were able to liquidate while futures remained at elevated levels. We are quite concerned about price action in fats and feeders, so again, if you have been waiting for a push to establish protection, consider this it.
