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Index funds still active

Agriculture.com Staff 02/14/2016 @ 3:04pm

Corn Commitment of Traders: Subscribers to the Allendale's research through our website have access to the Special Reports page. In there we update charts of interest to both grain and livestock traders. Every Friday afternoon the CFTC releases the Commitment of Traders.

It details what class of traders was holding what positions as of the previous Tuesday. As of Tuesday the trading funds (who go either long or short) as a group were net long 243,687 contracts. Back on October 9 they were only long 96,126 contracts. In fact this is the biggest net long position for them since March. In the Special Reports section of our website you will find the chart which compares fund positions to current corn prices. This type of chart has been added featured in many industry presentations over the years. The other class of speculators are the index traders. They go through large money firms like Goldman Sachs and simply want to be long commodities by following an index of various commodity prices. The money firm will put appropriate longs on for in various markets to match the index and give them the profits or losses accordingly. Money continues to increase from index traders as they are net long 383,014 contracts. Back on October 9 they were long 351,498 contracts.

Soybean Commitment of Traders: Where trading funds have been doing nothing but adding to longs in corn it is interesting to see they have been taking money off the table in soybeans for five weeks now. From August up until December 11 they had increased their net long position to 137,780 contracts. From that period to current (114,406 contracts net long) they have been taking profits. The index funds had generally been increasing longs until last week when they dropped 10,907 contracts from their record long position. Let's put this in clear terms. The market had been pretty much straight up from August up until this week. Funds had been driving this one up until mid December. If they were not doing this last leg then who was buying? It was commercials. At the same time funds stopped buying commercials started blowing out of their record net short position. From December 11 to January 15 they dropped out of 20,477 contracts. Small speculators started blowing out of their short position a few weeks before. This is not a bullish information. Essentially the group that led the way is bailing ship. The only guys buying right now are the losing money that is saying enough is enough.

KC Wheat Commitment of Traders: Very similar to the soybeans the funds and index funds have been getting out of longs on this last leg up in prices. The shorts are the ones bailing out and buying recently. That is not bullish.

Chicago Wheat Commitment of Traders: This one is a little unusual. Unlike the other Commitment of Traders findings, the trading funds are not bailing out of shorts. They are buying. From late November they brought their 19,950 contract net short position up to a 2,517 contract net long position and prices rallied. In this case the speculative money likes the Chicago wheat and is still interested in long positions.

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