Canada Markets

Bearish Data Yet to Slow the Canadian Grain Flow

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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The combined net-short futures position for Chicago wheat, corn and soybeans reported by the CFTC as of Jan. 5 was reported at 229,347 contracts, trending lower from a net-long position last July, and the largest net-short futures position reported in data since 1986. (DTN graphic by Scott R Kemper)

Global equity trade began what may be yet another shaky weak, with China's Shanghai Composite down 5% on Monday while Reuters reports global stocks at a 2 1/2-year low. Commodities have also reacted lower on Monday, with West Texas Intermediate oil for March delivery reaching a low of $30.88/barrel, its lowest level since December 2003. Another key commodity, copper, which is often viewed as a barometer of the health of foreign economies, reached its lowest level since April 2009 during Monday's activity.

Grains and oilseeds remain trapped within an environment of global uncertainty combined with adequate supplies, while non-commercial traders or investors continue to bet heavily against grain. As seen on the attached chart, the sum of the net-short positions held by non-commercial traders or investors of the combined corn, soybeans and Chicago soft red winter wheat as of Jan. 5 is the largest seen in data going back to January 1986 and likely a record at 229,347 contracts. This is down from the 2015 net-long high of 450,708 contracts reported for July 19.

This combination of bearish bets consists of 61,762 contracts of corn (futures only), 78,915 contracts of soybeans and 88,670 contracts of Chicago wheat.

Monday's trade ended lower for all three commodities ahead of Tuesday's monthly World Agricultural Supply and Demand Estimates (WASDE) report, which could potentially confirm the suspicions of the bears and lead to even further selling. A Bloomberg survey reported Dec. 1 stocks of both U.S. corn and soybeans will be reported at the highest levels ever, while wheat stocks will be reported at five-year highs.

Movement of U.S. grain also suffers, with one Minnesota grain handler reporting to Bloomberg the "slowest sales pace in the 25 years I've been in the grain business," while going on to say "it's amazing how well famers were able to put away those bushels and wait for a recovery in prices that has failed to come."

In Canada, producers have been partially cushioned by the weak Canadian dollar, while have read the signals well. Cumulative data as of week 22 (the week ending January 3) indicates producers have delivered 24.587 million metric tons into licensed facilities in the west, 2.26 mmt higher than the same time from last year and 3.54 mmt above the grain delivered in the same time frame in 2013/14 after Canada produced a record crop.

Movement also remains a boon to the industry. As of week 22, cumulative crop year unloads of all grain at western port terminals (Vancouver, Prince Rupert, Churchill and Thunder Bay) was reported at 16.249 mmt, up 2.1% from the same date last year and 27.1% higher than the five-year average.


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