The collective buying and selling of speculative funds, also known as "managed money", can significantly affect the prices farmers receive for what they produce. So, how are these funds positioned today?
Corn: After building a huge net short position in futures this summer, the funds started covering. Their repositioning (buying) continued into late November, leaving them with a moderate net long position today. Time will tell if the funds continue to buy - or start selling again if there is a trade war in 2025 or if the weather in South America remains favourable. One certainty is spot corn prices would be a lot lower if the funds had not been active buyers over the past few months.
Soybeans: After covering their shorts the early stages of harvest, sending prices higher, the funds started rebuilding their short position in soybeans in November. Current positioning is moderately negative/bearish. There is the potential for a larger downturn linked to fund activity if US demand is worse than expected this winter or Brazil crop ideas remain huge. On the other hand, a positive surprise could ignite another short-covering rally.
Soybean meal: Of all the markets, positioning in meal is one of the most extreme. Funds hold a massive net short position in meal futures. This does not tell us when the market will form a low or at what price. It does indicate a tremendous amount of money is leaning on the short side. It could be time to start watching soybean meal closely for bottoming signals.
Wheat: Funds are currently moderately short in Chicago and KC winter wheat futures, having added to their positions during the downturn of the past couple of weeks.
For Minneapolis HRS wheat futures, the funds hold a near-record net short position. As with soybean meal, this does not tell us when a low will form but it indicates that positioning has already reached a bearish extreme. Many other factors are in play when analyzing a market but for spring wheat, fund positioning is stretched by the standard of the past 20 years.
Canola: Funds are rebuilding their short position in canola futures, after a shift to a more balanced (less negative) position this fall. Although the funds have room to keep adding to their net short position, if technical and fundamental factors support it, there is also the chance of an adjustment higher in price if the funds cover their shorts.
Lean hog futures: Speculative funds hold an enormous net long position in hogs. Although the funds may keep buying and recent fund activity has been very positive for the market, the chart below suggests a sudden reversal lower is also possible. Something to key an eye on as we move into 2025!
