What Happened to the Speculators: On Friday, gold and silver started the morning with significant losses. Contract highs on the June gold contract are $728. From that high to Friday's lows, gold has lost $67 or 9% of its value. All this happened in last week's five trading days. Contract highs in the June silver contract are $14.80. With Friday's $12.00 lows in hand, silver has fallen $2.80 or 20% of its value.
There was talk that some of the speculative commodity money which has flowed into commodities in recent weeks is starting to flow back out. The floor noted rumors of one $12 billion fund exiting commodities and moving into bonds.
On Friday, the commitment of traders update provided an eye opening view of the money which has moved into grains. The fund position in corn (including options) went from 188,305 net long on the 9th to 270,723 net long as of Tuesday the 16th. That is a one week gain of 82,418 contracts and the second largest one week gain in history. In these commitment of traders reports, the CFTC puts mutual funds, managed individual accounts run by commodity trading advisors, and very large individual accounts all in the large speculator category.
The other avenue speculative path large traders can use are the long-only index funds. Positions there can be in the commercial category of the report, where it is hard to separate it out from true commercials. Our main message here is a tremendous amount of speculative money has been flowing in. We cannot predict what they will be doing this week. It is safe to say, putting bullish hopes on money new to commodities may give a sleepless night or two.
Corn Acres: Last week, we detailed the surprising fact when USDA comes out with a big acreage reduction on the March report they usually follow it up with another acreage reduction on the June report. The question was asked if we could research the odds and adjustments of planted acres from the March Planting Intentions Report to the June planted acreage report. We do not believe that will happen this year. Instead, our studies suggest the price increase seen since the March surveys were sent out and the aggressive planting pace will add corn acres.
Soybean and Wheat Speculators: Unlike the corn, large funds in soybeans only increased their long position by 6,639 contracts. That is certainly no where near a record position by any stretch. The wheat situation is a little different. Using the Chicago wheat contract, our studies show large speculators (mutual funds, cta's, and large individual accounts) increased their net long position by 22,613 contracts. That is the fourth largest week-to-week gain in history. This makes it clear this new money is centered on corn and wheat which makes soybeans along for the ride.
Allendale Lean Hogs: The monthly Cold Storage, released on Friday, can be called neutral to maybe a little negative for lean hogs (total pork stocks) and slightly bullish for pork bellies. Pork in storage totaled 516 million lbs which was at the high end of estimates. It represents a 14 million lb increase from last month which is above the 10 million lb average increase. The trade was also looking at the total chicken stocks. Though there were no estimates the actual numbers could be construed as neutral to a little positive.