Canada Markets

The Commodity Futures Trading Commission monitors the holdings of the various classes of traders on a weekly basis. The reported data for non-commercial traders or investors makes up one of DTN'S six-factor approach to market analysis, as the decisions of investors cannot be over-emphasized.

While CFTC data is currently behind schedule because of the U.S. government shutdown, a data release yesterday reported positions as of Oct. 8. This report showed the sixth consecutive week where non-commercial traders increased their net-short position of corn, ending with a net-short position of 124,101 contracts. This is the largest net-short position held by this group since the week of July 6, 1997, when investors held a net-short position of 193,810 contracts. This is seen on the attached chart at the lower, right corner of the chart, where the blue shaded area of the histogram has moved below the zero line to minus 124,101 as highlighted on the vertical axis on the right, while the shaded area seen in 1997 spikes even lower indicating an even larger net-short position.

In chart data that goes back to Jan. 1986, only 14 weeks have seen a higher net-short position than current data. Eleven of these weeks fell between October 1996 to January 1997, where the net-short ranged from 143,245 contracts to 226,300 contracts. An additional three weeks in June and July 1997 saw the net-short position range from 135,335 contracts to 193,810 contracts.

This chart speaks directly to the bearishness of the investor class as the U.S. harvest of close to 14 billion bushels (355.6 mmt) nears completion. The impact of investors' decisions can be seen by the movement of the red line which is the continuous corn price, as measured against the left vertical axis. Prophet X calculates the correlation coefficient at .696, which suggests that changes in the net-position of corn futures held by investors is explaining 69.6% of the moves in corn's price in this example.

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Chris Jamieson can be reached at chris.jamieson@telventdtn.com

(ES)

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