The CFTC this afternoon confirmed that, as of Tuesday, managed funds held a record net short position worth 231,000 contracts. Even following today’s rally, ARC estimates funds’ position this evening at a net short 230,000. As seasonal trends point upwards in late Nov, profits are being taken. Argentina remains dry. China is rumored to have secured several cargoes of US corn, and the Brazilian real is noticeably stronger today. A secondary bottom has likely been scored.
Notice in the graphic that extreme short positions rarely last beyond a few weeks. While massive supply dislocation is needed to change the structure of grain markets, a short term rally effort very likely lies in the offing. Note, too, that operational models now peek into the opening days of December, and still no meaningful rainfall is offered to the driest areas of Argentina’s Corn Belt. Await a test of $4.00, Dec 18, to extend new crop sales. Next resistance in spot futures lies between $3.50-3.55, basis Dec.
