Periodically, we like to check the positioning of speculative funds in grain & oilseed futures markets. These days, the funds are generally short or extremely short by historical standards. While this doesn’t guarantee that a bottom is imminent, it could set the stage for a sharp rally driven by short covering if the right trigger comes forward.
In corn, the funds are at a bearish extreme. Collectively, they hold a huge net short by the standards of the past 20 years. Some analysts will interpret this as a signal that corn should be monitored for signs that a low is forming.
Chicago Soft Red Winter wheat futures are the largest and most liquid wheat futures market in the world. As such, it is the market where speculative funds tend to be active. Today, those funds are moderately short, with some covering of shorts evident in recent weeks.
Meanwhile, in the smaller Minneapolis spring wheat futures market, speculative fund positioning remains at a bearish extreme. Funds are holding a massive net short. This does not tell us when a low will form. It does tell analysts that it is too late to be really negative toward spring wheat futures anymore!
Canola futures have been falling steadily since September, due in part to aggressive fund selling. Today these funds hold the largest net short position in canola in history.
The funds are also holding a large net short in soybean oil, combined with a moderate net short in soybean meal. Today’s positioning in meal is a huge shift since last summer – when the funds were heavily long and futures prices were much higher.
In soybeans themselves, speculative funds are building the largest net short since 2019. This suggests that soybeans, like many of the main crop futures markets, are getting stretched to the downside heading into the spring.
