CHICAGO, March 15 (Reuters) - Expanded speculative position limits for agricultural futures scheduled to go into effect on Monday could eventually add to market volatility as commodity funds are allowed to build larger bets on market direction, analysts said.
Futures exchange operator CME Group, parent of the Chicago Board of Trade, is expanding position limits in wheat, corn, soybeans and other commodities following a final rule published in January by the U.S. futures regulator, the Commodity Futures Trading Commission.
The change comes at a time when commodity funds hold large net long, or bought, positions in CBOT corn and soybean futures, typically a sign that funds expect prices to rise. Both markets have hit multi-year highs in recent months in response to tightening global grain supplies.
The new rules will roughly double the number of contracts that speculators can hold in "spot," or front-month, contracts while also raising the limits for positions held in all contract months combined.
"The expectation is that higher position limits will lead to higher volatility, with perhaps higher highs and lower lows in the months ahead," Arlan Suderman, chief commodities economist for StoneX, a brokerage, said in a note to clients.
With a $1.9 trillion U.S. stimulus on the way against a backdrop of loose monetary policy, some analysts expect inflation to pick up, a development that could steer investors toward commodities.
"I have been talking to people in this industry (that) I haven't talked to since 2010 and 2011, who are now coming back and seeing our space as attractive," said Dan Basse, president of Chicago-based AgResource Co.
"If you look at the price of equities relative to commodities, we are extremely undervalued," Basse said.
"Our markets are getting bigger. I think it will lead to more volatility, but maybe more importantly, the higher price level and the tightness of supply and stocks does that by its own right," Basse said.
awesome export nmbers
I've decided to start going long corn. Beans, I think, are going to be okay, but there are too many obstacles over the next couple months, to be comfortable in a short corn position.
Having said that, you might want to go short now, because I have an uncanny ability to turn markets against me. :)
Thanks Jim!
If we dry out in the Cornbelt this Spring, drought fears will take us into the stratosphere!
I believe you are right Mike.
"If, If were a skiff we'd all have a ride," grandma Cutworm
Yesterday China booked 1.156 corn and today they are here again for 1.224
Corn bull spread July/Dec. still moving up
Thanks bcb!
As a reminder, this is what happened to ethanol grind in February amid the historic winter storm:
NOPA U.S. crush, February 2020: 155.158 mln bu of #soybeans crushed17-month low;
-7% YOYTrade avg 168.6, low was 158.8
Soyoil stocks 1.757 bln lbs (trade was 1.839)Stocks down slightly from Jan; -9%
YOYMeal exports 838kt, +10% YOY
USDA sales
2 responses |
Started by Jim_M - March 18, 2021, 10:09 a.m.
https://www.marketforum.com/forum/topic/66796/
https://apps.fas.usda.gov/export-sales/highlite.htm
