Corn has pulled back a bit from Monday's recent highs as limited headlines prove not enough to feed what has been an increasing number of bulls. Demand here in the U.S. has remained strong, but the bears continue to question how long ethanol plants will continue to operate under the current highly profitable margins? There was also some confirmation yesterday that the Chinese are going to auction off some 5.0 MMTs of corn from their domestic supply next week. I'm not certain about the overall "quality" of their corn being auctioned off, but it will be something I monitor. As a producer, I continue to hold out for slightly higher corn prices before pulling the trigger on additional sales. From a spec perspective, I prefer being a longer-term buyer on a deeper break.
CFTC Data, Hedge Funds and the Grain Market: The latest CFTC data showed hedged funds increased their bullish stance in both corn and wheat to fresh new seven-month highs. Interestingly, speculative net longs are now seen across the board in wheat, corn, soybeans, meal, soybean oil and even cotton. Hedge funds cut their gross long positions in both live and feeder cattle.
Soybeans remain stuck in a sideways channel, but I remain optimistic, believing higher prices might be right around the next corner. Demand obviously remains strong, and the late-planted crop in Brazil clearly has the global market a bit nervous. I've been saying it for several weeks, the world is just not comfortable as of yet in pricing soy at what is perceived to be discount levels (sub-$9.60). My thoughts are if we can catch a bullish weather headline out of South America within the next few weeks (which I believe that card is in the deck) we could take out the most recent new-crop NOV15 high of $10.56^6. I am sticking with the thought that higher soybean prices might be in our near-term future.