future

By Karen Braun

NAPERVILLE, Illinois (Reuters) -The recent buildup of speculators’ massively bullish Chicago corn bets has been well publicized.

But the growing and now unparalleled rift between investors’ corn and wheat positions may have been less apparent.

In the week ended Jan. 28, money managers increased their net long position in CBOT corn futures and options to 350,721 contracts from 311,678 in the prior week, establishing their most bullish view since May 2022.

The move stemmed primarily from new gross long positions and came despite a 1% decline in most-active CBOT corn futures during the week.

CBOT wheat futures fell 2.4% in the week ended Jan. 28, and money managers expanded their net short in CBOT wheat futures and options to a 14-month high of 110,782 contracts. That was up about 19,000 on the week, a good portion owing to new gross shorts.

There has never been such a disparity between money managers’ corn and wheat positions since records began in 2006, and this has become increasingly distinct over the last five weeks.

The closest examples where funds were super bullish corn and super bearish wheat are from early 2023 and mid-2016. Interestingly, some of the largest ever weekly corn selloffs occurred directly following these two periods.

However, the current situation deviates so significantly that these past examples may not be relevant. Also, the time of year plus the size of funds’ corn position might favor the maintenance of bullish corn bets in the near term.

Corn and wheat’s sometimes interchangeable use means that their prices can move in tandem, though wheat’s premium to corn is already relatively low at 77-1/2 cents per bushel as of Friday. That is in the lowest 14% of all data within the past five years.

CBOT corn futures over the past few months have been supported by strong U.S. demand and shrinking global supplies, and more recently by weather concerns for South American crops. However, dominant Russian supplies have held down wheat prices.

But grain bulls now face potentially severe headwinds from the United States’ fresh trade war against Mexico, Canada and China, which in 2023 accounted for half of all U.S. agricultural and related product exports.

U.S. President Donald Trump on Saturday imposed 25% tariffs on Mexican and most Canadian imports and 10% on goods from China, starting on Tuesday.

SOYBEANS, CATTLE, COTTON

Most-active CBOT soybeans lost 2.1% in the week ended Jan. 28, but money managers increased their net long position to a 14-month high of 56,496 futures and options contracts from 40,330 a week earlier.

Short covering was the primary feature of the week across the soy complex. Money managers extended their net long in CBOT soybean oil futures and options to a 10-week high of 39,768 futures and options contracts versus 24,214 in the prior week.

They also cut their large net short position in CBOT soybean meal futures and options through Jan. 28 to 52,291 contracts, down about 9,000 on the week. Both soyoil and soymeal futures had posted losses during the period.

CME live cattle futures soared again to all-time highs last week, and money managers established a record net long position as of Jan. 28 totaling 156,909 futures and options contracts.

However, they forged a record net short in ICE No. 2 cotton futures and options of 53,574 contracts, up more than 5,000 on the week. Cotton futures hit nearly six-month lows on Friday as China’s relatively light purchases of U.S. cotton as well as impending tariff fears weighed on prices.

The United States on Saturday reopened the door for Mexican cattle imports, which have been blocked since November due to screwworm cases. This is among factors that have recently supported cattle futures, though it is unclear how the tariffs may impact this trade flow.

Karen Braun is a market analyst for Reuters. Views expressed above are her own.