by Agrimoney.com
Corn futures remain under threat of further liquidation by speculators despite the "largely indiscriminate" selling which has already slashed their long exposure to the grain – by some 20% in a week.
Corn accounted for a large chunk of the equivalent of 15m tonnes of crops and livestock sold by speculators on the main US farm commodity markets in the week to June 21, the latest data available.
Speculators' net long position in corn – the advantage in bets on rising prices of the grain over the short positions which profit when the market falls - fell to 239,000 contracts, down 57,000 lots in a week, on Australia & New Zealand Bank analysis of regulatory data.
Nonetheless, corn accounts for some 60% of the 53m tonnes of farm commodities in which speculators still hold a net long position, making it vulnerable to further liquidation should market jitters return.
"Corn still remains the most susceptible to ongoing selling of risk from outside markets," ANZ said.
Overbought, oversold
The bank also rated hard red winter wheat, the type traded in Kansas, as relatively overbought, on levels of interest by speculators, despite them shedding more than 10% of their net long position in the latest week.
However, soybeans have edged toward oversold territory, into which soft reed winter wheat, as traded in Chicago, is "moving fast", with speculators' net short position reaching 32,000 lots, the highest in seven months.
Cocoa is also oversold on this measure, as is coffee which Standard Chartered analysis on Tuesday showed reaching a speculative position within sight of its two-year low.
Analysts take a range of different approaches to analysing the investor positioning data released by US regulators, with some looking just at futures, and others, such as Standard Chartered, including options.
ANZ takes a broader view of speculators than some other observers, including "other" and "non-reportable" categories in the official reports, besides the widely-used "managed money" criterion.
'Largely indiscriminate'
The comments came as crops showed signs of pulling out of a decline which, as of Monday's close, had driven Chicago wheat down 20% so far this month, and corn down 15% in the previous fortnight.
The "largely indiscriminate" selling, fuelled by fears for Chinese and US economies and Greek sovereign debt, had left speculator's net long position in farm commodities at half the record level of 107m tonnes hit in February.
Standard Chartered analyst Abah Ofon said that a "key takeaway" from a round of client meetings in Hong Kong, London and Tanzania over the past month was that "instability in other asset markets would weigh heavily on agricultural commodity price sentiment", without fresh evidence of a squeeze on crop supplies.
The US Department of Agriculture will on Thursday release much-anticipated data on American grain stocks and sowings which many bullish investors hope will revive the rally in futures prices.
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