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Corn, Wheat and Soybean: How are Traders Positioned Ahead of WASDE

By:Thomas Westwater

Corn, wheat and soybean futures. Where are prices headed next, and how can trader positioning data shed light on potential price moves?

In an increasingly buoyant marketplace, soybeans (/ZS) have surged by nearly 4% this month, compounding the impressive 2.78% growth seen in the previous month. This upward trend signifies a bounce back from the lowest price point since December 2021.

However, it's not all upward trajectories. Corn (/ZC) has witnessed a 1.78% downturn this month, nullifying the 0.42% gain from the last month. Despite these fluctuating metrics, corn prices have managed to stay steady, hovering around the lows of August, which represents the lowest price since December 2020.

For wheat (/ZW), we observe a 2.16% price rise, fueling a rally that originated in October. These escalating prices cast off lows, which had remained untraded since September 2020.

Where are prices headed next, and how can trader positioning data shed light on potential price moves?

Corn trader positioning

According to the Commitments of Traders (COT) report from the Commodity Futures Trading Commission (CFTC), non-commercial traders—a category made up of large and small speculators—trimmed 4,118 long contracts and added 35,298 short contracts for the period ending Oct. 31.

That put long speculator positions at 278,919 and short speculators at 366,615. Over the past month, corn traders have grown increasingly bearish on the commodity, as seen in the chart below. The growing short position puts prices at risk of a potential squeeze if there is a sudden reversal to the upside.

cot corn

Wheat trader positioning

Wheat trader positioning wasn’t as pronounced as corn, but long speculators added 1,148 contracts, while short speculators added 10,768 for the same period. That put total long speculators at 122,955 and shorts at 192,522.

That puts longs in the largest position since November 2021. Meanwhile, wheat shorts are approaching the largest position since November as well, although we are close to clearing that level and hitting the largest position since early 2018.

With wheat prices near the lowest since late 2020, prices are at risk of a short squeeze, which could occur if there are any notable shifts in the underlying fundamentals that drive the market.

cot wheat

Soybeans trader positioning

Soybeans, like corn and wheat, have witnessed a rebound from multi-year lows, although prices remain depressed from levels traded at earlier this year. Prices are up nearly 4% this month following last month’s 2.78% increase.

Traders reacted by cutting long and short positions last week, with longs dropping 31,510 to 103,628 contracts and shorts cutting 11,316 contracts to total 87,368. That put the long speculators at the smallest since 2010.

Meanwhile, shorts pulled back from levels seen in May. If prices continue to rise, it could force more shorts to cover their positions and help to lift prices further.

cot soybeans

Incoming WASDE report key to market direction

The World Agricultural Supply and Demand Estimates (WASDE) report is scheduled for release Nov. 9. This is a market-moving report that agricultural traders watch closely and thus warrants attention from traders.

Thomas Westwater,a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater

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