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We’ve been discussing for months now that the large speculators holding such a large net short position was a positive for the corn and bean markets. Since April we’ve been saying the opposite for hogs, the large net long position posed a threat to the market should the large spec start to liquidate their long position.

That’s exactly what they did, and now the question is will they continue to unwind or take a breather?

The past few extremes occurred at approximately the same time, late spring and early summer. Those unwinding events saw commercials return to net short ~60,000 and ~-25,000 contracts, while as of last Tuesday commercials are still short over 100,000 contracts…lot of room lefts. The flip side saw large specs previous reduce their net long exposure to ~-5,000 and ~-45,000 contracts, and they are sitting at net long 2,118 as of last Tuesday.

Bottom line: CFTC COT’s are worth watching. It appears that this move is not yet over, at least on this singular indicator, but we expect it to run out of steam in the next week or two.


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