2/21/2024

Decline in soybeans and corn at maximum

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Key points:

  • The combined net short position in soybeans and corn reached 448,841 contracts, close to the 2019 record.
  • Open interest in these commodities exceeded 3 million contracts for the first time since June 2022.
  • US corn inventories in 2024-25 are projected to be the largest since 1988.

The bearish trend in two significant agricultural commodities, namely soybeans and corn, is approaching historical levels. The Chicago Board of Trade reported that, for the week ending Feb. 13, the collective net short position of traders in corn and soybeans increased by almost 21,000 contracts, reaching 448,841 futures and options contracts. This is approaching the record high of 455,225 contracts set in April 2019.

As of Feb. 13, the combined open interest in corn and soybeans surpassed 3 million futures and options contracts. This marks the first time it has exceeded this threshold since June 2022, representing a 19% increase from a notably low level a year ago, yet aligning closely with recent averages for this period.

Soybean futures continue to decline

The week witnessed a decline of over 1% in May corn and soybean futures. Looking at specific details, traders significantly increased their net short positions in corn to 314,341 futures and options contracts. This figure represents the second-highest total ever recorded, rising from 297,744 contracts the previous week. The increase was primarily fueled by the introduction of new gross short positions.

In the realm of soybean futures and options, the net short position for money managed as of Feb. 13 ranked as the fifth-largest on record, totaling 134,500 contracts. This marked an uptick from the previous week’s 130,300 contracts. Notably, this is the 13th consecutive week of decline in soybean prices, with the sales record extending through the first ten weeks of 2024.

A big corn harvest is expected in the US

Thursday saw the USDA unveiling preliminary U.S. supply and demand predictions for the upcoming 2024-25 season, commencing on Sept. 1. Anticipated stockpiles of corn, soybeans, and wheat are set to witness substantial growth compared to the ongoing season.

Corn stood out with the most notable figures, as forecasted inventories in the U.S. for 2024-2025 are projected to be the largest since 1988. Moving to soybeans, stocks in the coming year are expected to reach a five-year peak, surpassing the average of the past four years by more than 50%.

Wheat showed mixed results

Wheat contracts were mixed for the week, with traders cutting their net short positions in wheat futures and options to 55,672 contracts from 66,738 the week before. This is evidence that traders have maintained the least bearish view on wheat since early August.

However, wheat fell more than 6% between Wednesday and Friday, its biggest three-session fall since September. The May corn contract has fallen 3% over the past three sessions, with both wheat and corn hitting contract lows on Friday.

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