12 August 2016 at 12:30 GMT
- 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).
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.
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.
— Edited by Martin O'Rourke
Ole Hansen is head of commodities strategy at Saxo Bank