Hedge fund positions for Corn, Soybean Meal, and Live Cattle are at 52-week extremes

Spread Edge Capital specializes in seasonal spread trading across a wide variety of commodity markets. A spread trade is the simultaneous purchase and sale of the same commodity with different delivery dates.  SpreadEdge publishes a weekly Newsletter that provides several seasonal spread trade opportunities every week.

Overview

Each week the SpreadEdge Newsletter documents an extensive list of seasonal, technical and fundamental indicators for the various commodity markets.  This article will focus on hedge fund position estimates for Grains and Meats and dive deeper into Corn, Soybean Meal, and Live Cattle.  

Hedge Fund Position Estimates

The Commitment of Traders (COT) report, issued by the Commodity Futures Trading Commission (CFTC), offers a weekly snapshot of the positions taken by different market participants in the U.S. futures markets. Published every Friday at 3:30 PM Eastern Time, the COT report reflects positions held as of the previous Tuesday's closing business hours.  Peak Trading Research assesses the latest COT report, examining alterations in price and open interest to provide an appraisal of net fund positioning daily.

• Corn and Live Cattle are at their highest hedge fund positions for the past 52 weeks.  Feeder Cattle is near its highest level.  
• Soybean Meal is at its lowest level for the past 52 weeks.
• When hedge funds begin to unwind these record positions, this will put significant pressure on market prices,

Technical Analysis

• Despite the record net long levels in Corn, front month Corn has been drifting lower since the first quarter of 2022.  Corn has closed the past few weeks right on the downward trendline and will either burst through or bounce down from this level.
• Live Cattle is making its 3rd attempt to break through the September 2023 high.  Each failed attempt generally reduces the breakout chances.

• Soybean Meal continues to grind down the downward channel with seemingly no end in sight.  However, I am opening a long calendar spread this week as % carry yield, CTA momentum, and the relative strength index are at extreme levels (in addition to the record hedge fund positions).  See my article from this weekend.

More Information

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The SpreadEdge Weekly Newsletter is published every weekend and provides a broad overview of the important seasonal, technical, and fundamental indicators within the Energy, Grains, Meats, Softs, Metals and Currency markets.  In addition, spread trade recommendations and follow-up on open trades is also provided.  For a free copy of the Weekly Newsletter, please send an email to info@SpreadEdgeCapital.com

Darren Carlat

SpreadEdge Capital, LLC

(214) 636-3133

Darren@SpreadEdgeCapital.com

www.SpreadEdgeCapital.com

Disclaimer

SpreadEdge Capital, LLC is registered as a Commodity Trading Advisor with the Commodity Futures Trading Commission and is an NFA member. Past performance is not indicative of future results. Futures trading is not suitable for all investors, The risk associated with futures trading is substantial. Only risk capital should be used for these investments because you can lose more than your original investment. This is not a solicitation.