Market Morsel: Cornhub – Traders soft on corn.

Grain | 26th February 2024 | By Andrew Whitelaw

Market Morsel

In recent weeks, we have talked a lot about how corn will drive the wheat market for the next little while.

One of the data points we look at for grains is the commitment of traders’ reports, and this week, it shows some interesting data on the corn market.

The commitment of traders report indicates how speculators are ‘betting’ on the market. When the report shows a net short (a minus number), then it signifies that overall, the speculator market is betting on a lower market, and profiting from a fall. The opposite applies when the trade is at a net positive (a plus number).

The first chart below shows the seasonality of the COT report. At the start of last year, speculators were betting on a rising market, but as the year progressed, their position moved to net short.

If we look at the second chart, the current net short is the highest that it has ever been.

So what does this mean? Speculators are putting their money on corn pricing falling, which has become a record net short.

It doesn’t mean they are always right. If something happens to push the market higher, then these speculators will have to cover their shorts, and when that happens, we tend to see fast corrections in price.

The wheat market will likely follow the trend of corn.