Key points:

  • Traders are trimming short positions in grains and oilseeds, which until recently were at near record lows.
  • Corn prices fell more than 3% and soybeans by about 2.5%.
  • Wheat futures rose 4.6% for the week.

Although traders have recently been trimming their short positions in grains and oilseeds, which until recently were at near-record lows, the trend continued last week. This is due to crop concerns due to unfavorable weather conditions in many regions of the world.

For the period ended May 14, net short positions in corn futures and options on the Chicago Board of Trade fell to 71,171 contracts, down from 102,513 contracts the week prior.

Soybean and corn prices fell

The volume of new long positions in corn slightly exceeded the volume of covering short positions. This was in contrast to the previous three weeks, when short positions dominated.

On May 10, the United States Department of Agriculture (USDA) released its first official forecasts for the 2024-25 marketing year. US corn inventories are expected to increase by just 4%, well below the 17% forecast in February. At the same time, corn planting in the US is behind schedule due to unfavorable weather conditions associated with high humidity.

However, corn prices fell more than 3% between Wednesday and Friday as the market priced crop weather for heavy rains earlier in the week.

USDA forecasts for U.S. soybean stocks for next year are unchanged from February and still call for more than 30% growth. However, export demand for new-crop U.S. soybeans is at its lowest level in 23 years. These pessimistic forecasts were partially offset by floods in southern Brazil, which are estimated to reduce soybean production by 3 million tons.

Traders increased their net short positions in soybeans by about 1,200 contracts through May 14, bringing them to 42,665 futures and options contracts. Notably, they reduced their net short position by a record 108,000 contracts last week, driven by rising futures prices due to floods in Brazil.

Soybeans, soybean meal and soybean oil fell about 2.5% for the week.

Wheat futures rose

Wheat futures rose 4.6% for the week. Traders cut their net short positions from 42,360 futures and options contracts a week earlier to 28,251 contracts. This makes their position the least bearish since October 2022.

There is a decline in the managed money net short position in Kansas City wheat futures and options, which fell to its lowest level since September last week. Traders were net long futures and options in Minneapolis for the first time since early August, following a record three-week short squeeze in spring wheat.