Band Karen Brown
NAPERVILLE, Ill., April 17 (Reuters) – Speculator enthusiasm for Chicago-traded grains and oilseeds neared record highs last week as tighter-than-usual global inventories and uncertainty in Ukraine continue to support prices.
Minimal grain and oilseed shipments from Ukraine have disrupted and even diverted global trade, an example being China’s recent purchases of US corn, the first in nearly a year. Moscow hinted last week that an end to the conflict may not come soon, further spooking traders.
Ukraine’s Agriculture Ministry said on Friday that farmers may plant more spring crops than previously thought, but still 17% less than last year. Apprehension over production potential and the weather in North and South America also added to the nervousness.
However, some downside factors lurk. Demand for agricultural imports from the world’s largest buyer, China, was somewhat disappointing due to shutdowns and low producer margins, largely affecting soybeans. US farmers are expected to plant a record acreage of soybeans this spring.
In the week ended April 12, fund managers increased their net long position in CBOT soybean futures and options to 171,873 contracts from 163,655 a week earlier, according to data from the US. Commodity Futures Trading Commission.
This was based on the addition of new longs and was associated with a 2.4% gain in the most active soybean futures Sv1which was trading just under $17 a bushel last Monday.
New November soybean crop SX2 briefly traded below $14 a bushel on April 1, the lowest since early February, but they hit $15.20 on Thursday before settling at $15.01-1/2. The highest contract of $15.55 was set on February 24.
US markets were closed on Friday, but the US Department of Agriculture reported a slew of soybean sales that morning totaling 838,000 tonnes, mostly to China. About 64% of this amount was for delivery 2022-23.
Also on Friday, the National Oilseed Processors Association showed U.S. soybean oil inventories at the end of March fell 7.3% on the month, although they were expected to rise slightly. A weaker oil yield and stronger than expected demand are likely culprits.
CBOT Soybean Oil Futures BOv1 Wednesday hit an all-time high for the busiest month of 78.75 cents a pound after rising 4.2% in the week ending April 12.
Soybean oil is up another 2% over the past two trading sessions. Malaysian Palm Oil Futures Benchmark FCPOc3 Friday closed at a one-month high, capping its biggest weekly gain in six months. Tight vegetable oil supplies were compounded by the halt in exports to Ukraine, the main supplier of sunflower oil.
CBOT soybean meal SMv1 was the only loser among grains and oilseeds through April 12, losing 1%, and fund managers cut more than 7,000 contracts from their long net. However, the resulting 93,411 futures and options are extremely bullish in context.
Fund managers through April 12 increased their net long position in CBOT corn futures and options to 369,952 contracts from 362,306 the previous week. Most Active CBOT Corn CV1 added more than 2% during the period and gained another 1% between Wednesday and Thursday.
End users bought more corn through April 12 and commodity index traders increased their total number of positions by 2% to over 700,000 contracts, the most since June 2021.
Along with corn supplies from Ukraine, market participants have been concerned about cold US weather and the potential impact on corn plantings, although forecasts late last week showed chances of favorable heat towards the end of the month. CBOT corn hit contract highs on Thursday, including $7.39 a bushel for December new crop futures CZ2.
Wheat traders continue to worry about the dispute in major exporter Ukraine and the poor state of the wheat crop in the United States. CBOT Wheat Futures Wv1 jumped 6.4% in the week ended April 12. Kansas City Wheat KWN2 added 7.6% and Minneapolis MWEN2 increased by 4%.
Fund managers during this period added less than 3,000 contracts to their net long position in CBOT wheat, which reached 16,639 futures and options contracts. They added over 4,000 KC contracts, and their net long of 49,392 is a 14-week high. Their Minneapolis network has long stayed above 18,000 contracts.
All three wheat contracts fell slightly between Wednesday and Thursday. The most active Chicago wheat on Thursday hit $11.35-1/4 a bushel, its highest since March 23, although it stabilized at $11.04-1/2.
Karen Braun is a market analyst for Reuters. The opinions expressed above are his own.
Combined net position of graphically managed silver in CBOT/MGEX futures and options https://tmsnrt.rs/3M7LFNl
(Editing by Lisa Shumaker)
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