Futures File: No need to fear record fund short-selling | Jobs

The Trader Commitment Report for last Friday, February 23, revealed a shortfall of 340,732 corn units in managed money.

This marks a new record for short positions for the fund, surpassing the previous record of 322,215 units set in late April 2019.

The following Monday, the corn market hit a new low, then rebounded and fell just short of closing just above the previous trading day’s high.

Monday’s rally also consisted of a sharp decline in open interest, generally resulting in more short positions being closed out followed by the addition of new long positions, i.e. short covering from fund positions. It means.

Funds and traders commonly exit winning trades for two reasons. One is the fear of losing profits after fundamental changes in the market, and the other is the greed to lock in profits and return later at a better price. This week’s trades would suggest that greed won out this week.

After hitting a low of $4.09 on Monday, May corn futures rose $0.23 to Thursday’s high of $4.32.

It was an impressive rally in a short period of time with little fundamental news.

On Friday, March 1, two days after the first notice date (FND), the May futures price fell $0.07, returning to $4.22 by noon. For now, greed seems to be a good thing, with no plans to slaughter the pigs and they are still being fed.

However, although the decrease in open interest seems to be mainly due to short covering, it is certain that there was a large amount of March longs that were sold without rolling over to May.

If new longs decide to enter the market, the exit window for shorts could become even narrower as the number of old longs dwindles.

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Contact derrick.hermesch@pinionglobal.com or call 785-338-9605.

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