The CFTC has released the Commitment of Traders Report with trader positions as of 7/30, Tuesday of this week. Starting with the combined CBW chart above, we have some indication that specs may be running out of ‘new short’ powder. After approaching their all time largest net short (two weeks ago), they’ve rebounded roughly 55,000 contracts, though just 6,000 of that recovery was in the week ended 7/30.
Index funds hold the smallest long since April of 2019, and commercials of just off the recent largest net long they established earlier this month. At that point, commercials held a large net long and large specs held their largest net short. Let’s hope that we have a repeat of the 2019-2022 markets from here moving forward.
Corn
Looking at corn specifically, this is not the kind of short covering event we want to see…large specs reduced their net short by over 15,000 contracts…and Sep. corn fell ~15 cents, and Dec. fell ~12 cents. We are trading even lower today.
Note the change to the Large Spec graphic below. Price has been replaced by Large Spec Short % of total open interest, as we feel this is a better indicator of their market presence, and price movement is already known and also charted in the two charts immediately below. Large specs short positions currently account for 21% of the total open interest, this compares to their all time high of 27%. Spec longs are just 7% of OI. The bottom line is there is still a TON of buying potential from this group.
The decrease in the commercial net long indicates that farmers have started to clear their bins for new crop, or have started to price bushels already delivered on DP, likely a combination of both. Expect to see this continue for the next several weeks.
Soybeans
Shifting to soybeans, large specs were net sellers in the week ended Tuesday, adding a net 15,259 contracts to their net short, while commercials added 30,000 contracts to their net long, charging back to their record net long established 7/16/24. The on farm soybean situation is not as clear to us as it is in corn, either the bushels aren’t out there, or farmers are even more hesitant to price them. Large specs remain steadfast in their bearish outlook, and given domestic and global stocks, and the weather prospects for the next two weeks, we cannot blame them. However, we continue to be a believer that there is more potential to the upside than downside from today’s price.
Wheat
Specs continued adding to their wheat short in SRW, but were nearly equal net buyers of HRW. Commercials were net buyers of both. We believe this market has put in a bottom and had discussions earlier today about advising buyers to cover needs. The COT data was not a factor in that discussion, but specs don’t drive this bus in the same way they do for corn and soybeans.
