Key points:

  • Chicago corn, soybean and soy product futures hit multi-year lows.
  • Traders’ net short position in soybeans reached its highest level since 2019.
  • Traders’ net short position in corn increased by 15,000 in a week.

Last week, Chicago corn, soybean, and soy product futures experienced renewed multi-year lows, driven by traders persistently accumulating substantial short positions across various markets. Despite this, it is important to note that the worldwide increase in the supply of grains and oilseeds is an ongoing phenomenon.

Soybean supply exceeds demand

Extensive soybean harvests in South America have placed considerable strain, resulting in elevated levels of pessimism among traders and reaching multi-year peaks. Traders escalated their net short position in soybean futures and options on the Chicago Board of Trade to 108,247 contracts by the week concluding on Jan. 30, marking the highest level since December 2019.

Despite this, soybean sales witnessed a notable deceleration compared to preceding weeks. On January 29, the most active soybean meal futures touched their lowest points since December 2021.

Corn also remains bearish

Corn prices sank to their lowest point since December 2020 on January 30th. Despite a slight uptick in futures later in the week, the spotlight remained firmly fixed on the growing number of short positions traders were taking. This bearish sentiment resulted in a net shortfall of corn contracts jumping by almost 15,000, marking the strongest negative outlook for the grain since June 2020.

Historically, the record bearishness for corn was set in April 2019, with a net short position of 322,215 contracts, while soybeans peaked at 168,835 the following month.

On a brighter note, commercial entities like producers, processors, and end users dipped their toes into the soybean market, taking a small net long position for the first time since June 2019. These same players have also maintained a modest net long position in corn for the past month.

While infrequent, these commercial net long positions in corn and soybeans typically appear after significant price drops, offering a potential hint of cautious optimism amidst the overall bearish climate.

Wheat maintains stability

As pessimistic sentiments intensify regarding corn and soybeans, the perspectives of traders on wheat have shown a relative stability over the past few weeks. Their net short position, standing at 64,818 futures and options contracts as of January 30, saw a marginal increase from the preceding week. This aligns with recent multi-week averages and notably falls short of the figures recorded at the conclusion of 2023.