Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Article / 12 August 2016 at 12:30 GMT

Grain traders await the biggest report of the summer

Head of Commodity Strategy / Saxo Bank
  • WASDE monthly report due out at 1600 GMT
  • Corn has gone from long of 252,000 lots to short of 104,000 lots
  • Wheat trading close to 10-year low
  • Volatility low suggesting a consensus building towards report outcome
  • There could be fireworks if report strays from expectations


The WASDE report will set the context for grain for quite some time. Photo: iStock

By Ole Hansen

Grain markets have been trading quietly ahead of what could be the biggest crop report of the summer. Today at 1600 GMT, the USDA will release its monthly WASDE report for August. This will be the first report to include spring crop yield data from surveys, instead of just weather observations. 

Funds are holding a major short in corn following non-stop selling for the past seven weeks. During this time the net position has gone from a long of 252,000 lots to a short of 104,000 lots (data from week ending August 2). 

Speculative positioning in CBOT Corn

Wheat meanwhile trades close to a 10-year low and has been in a long-term decline almost since 2012. The outlook for booming global inventories have triggered a record short position in CBOT wheat.

Speculative positioning in CBOT Wheat

Volatility has, despite the importance of today's report, been trading steady which could indicate a strong consensus towards the outcome. Any divergence away from current expectations listed below could trigger some major fireworks. Especially if the data comes in on the low side considering the above mentioned overhang of short positions.  

August WASDE surveys
— Edited by Martin O'Rourke

Ole Hansen is head of commodities strategy at Saxo Bank
Ole Hansen Ole Hansen
Plenty of crops to go around but both wheat and corn ending the day higher with funds going heavily short into this report. Hedge funds increased corn net-short by close to one-third in week to August 9. More on this in the COT report on Monday.


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