Shocked by tariffs, funds clear bullish corn bets in near-record ways: Braun

(The opinion expressed here is the author, market analyst at Reuters.)

NAPERVILLE, Illinois, March 9 (Reuters) – The looming trade war between the U.S. and its two largest agricultural trading partners has sent bullish Chicago corn speculators running for the hill last week.

But there are very few bears.

U.S. tariffs on most Mexican and Canadian goods were postponed until April on Thursday. However, the levy came into effect Tuesday and the market responded harshly, especially since Mexico is the main destination for American corn.

The most active CBOT corn futures plunged 8.6% in the week ending March 4, the biggest such downturn since mid-2023. The monetary manager of the week spent its net time on CBOT corn futures and cut 219,752 contracts from 337,454 contracts a week ago.

Nearly 118,000 contracts per week sold are the second largest contract ever, second only to the 147,000 contracts sold in the week ended February 28, 2023.

On average, funds are evenly distributed between the desire to exit and new short positions. The unusually low 11% of last week’s move was attributed to the new total shorts, suggesting that the sell-off is essentially a bigger risk than a real bearish vote.

On the periphery of this week’s event, the USDA predicts the strength of U.S. corn cultivation in 2025, so domestic supplies can be restored, although this is largely expected. The prospects for South American corn crops have also improved recently.

However, global corn supply that can be used historically is thin, especially in Brazil, with stocks being the lightest in two decades. Meanwhile, demand has been persistent, prompting investors to establish a bullish corn state when they forged record bearish last year.

Speculators were also a large number of net sellers for the wheat and soy complex in the week ended March 4, but unlike corn, new short positions have driven those moves.

The currency manager gave up net worth in CBOT soy futures and options, with a net length of 35,487 contracts in the previous week at 35,487 contracts. Funds’ Bullish lasted seven weeks in Beans, with net sales in the last week being the strongest since last June.

By March 4, the most active CBOT soybeans fell nearly 5%, while Soymeal had 3% lighter and soybeans fell to 7%. Funds removed most of their net worth in CBOT soybean oil futures and options, down from 43,052 a week ago to 9,669 contracts.

Their net worth in soy flour futures and options reached a 10-week height of 85,344 contracts, while the 63,193 contracts in the previous week were almost entirely the result of new hair shorts.

Among CBOT wheat futures and options, the entrance to the new hair shorts is the heaviest week since 2017. The currency manager also added a small amount of total length, although the net short film has grown from 67,614 contracts a week ago to 82,399 contracts.

The fund’s bearish wheat bets and bullish corn bets have been out of sync so far this year, although last week’s epic corn sell-off brought things closer to normal territory.

However, corn futures have risen nearly 4% over the past three meetings as tariffs are delayed in Mexico and Canada. Other benefits are as follows: soybean 2.6%, wheat 2.7%, soybean milk 3.7%, and soybean 1.4%.

This week, trade will be focused on the USDA monthly supply and demand report that expires on Tuesday. It was not expected that the agency might include the impact of tariffs in its estimates if necessary, but there were no expected changes. Karen Braun is a market analyst for Reuters. The above point is her own.

(Edited by Himani Sarkar)