Major Development in Corn Futures

Tuesday, 16 Jul 2013 07:41 AM

By Rick Pendergraft

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Something happened in last Friday’s Commitment of Traders report for corn that hasn’t happened since December 2005. The group is net short for the first time in 7 ½ years.

As of July 9, large speculators were long 324,534 contracts and short 327,980 contracts, for a net short position of 3,446 contracts.

The commercial hedger group went net positive two weeks ago, and that position increased this past week.

There were two other things that also caught my eye about this development that are somewhat related.

In years past, the price of corn and the high net long positions came as oil was rising.
This is due to the fact that corn has energy uses, as in ethanol.

Since the government mandated that every gallon of gasoline must contain 10% ethanol, the prices of oil and corn have moved in the same direction most of the time.

While large speculators are net short corn for the first time since 2005, large speculators in oil almost set a milestone with over 300,000 contracts net long in the Commitment of Traders report from July 2.

The second item of note was concerning the other grains. Large speculators have built up the biggest net short position on wheat than they have had since November 2011.

Corn seems to be trading on its own right now. It isn’t coupled with the other grains and it isn’t coupled with oil.

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