The USDA Outlook Forum is February 22-23. The crop acreage math points to 1.4 million less corn acres in 2018 vs. 2017. The USDA Long Term Projections had US corn and soybean acres at 91 million each. Leaving wheat acres unchanged YOY, adding 600k acres to cotton, moving soy to 91 from 90.2 last year, leaves only 89 million acres for corn – down 2mm from the Long Term Projections. 89 million puts total area for the four crops at 239 million. 239 million would be the largest Forum number since 239.8 in 2013. 239 is equal to the final planted area last year.
Corn area will be challenged and the IAG Models indicate 91 million acres of soybeans will prove to be just adequate for growing demand. It is likely soybean acreage in the USDA March 30 Planting Intentions Report will be above 91 million.
The volatility in agricultural commodities has disappeared – kind of. Ag commodities are back in their “happy place” of abundance and oversupply, waiting for a weather event. One might expect that the spec funds, aka Managed Money (MM), have left for greener ($) pastures. This is not the case. The data shows they never left. They have however, changed the way they bet.
The change over the last five years has been their propensity to bet on the short side. Take a look at the data – graphs below – the growth in the short side bet is obvious. The graphs show the combined open interest for managed money long and short. The first graph totals all open interest for CME corn, soybeans, soy meal, soy oil, wheat, and KC wheat.
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