Commodities

Corn Smart Money Sentiment 6/19/19 – A Huge Reversal By The Smart Money

Dozens of corn farmers and those who sell them seed, chemicals and equipment gathered on Thursday at the restaurant in Deer Grove, Illinois, after heavy rains caused unprecedented delays in planting this year and contributed to record floods across the central United States.

The storms have left millions of acres unseeded in the $51 billion U.S. corn market and put crops that were planted late at a greater risk for damage from severe weather during the growing season. Together, the problems heap more pain on a farm sector that has suffered from years of low crop prices and a U.S.-China trade war that is slowing agricultural exports.

Forecasts for even more rain sent U.S. corn futures to a five-year high on Friday, though fewer farmers will benefit from soaring prices because of the planting disruptions.

Nationwide, farmers are expected to harvest the smallest corn crop in four years, according to the U.S. Department of Agriculture.

Source

The Commitments of Traders (COT) is a weekly market report issued by the Commodity Futures Trading Commission (CFTC) listing the positions held by commercial traders and the “Smart Money”, the hedge funds and bank institutions in various futures markets in the United States. Since the COT measures the net long and short positions held by speculative traders and commercial traders, it is a great resource to gauge sentiment in the Markets.

Before April, the Smart Money sentiment was 0% bearish, an extreme never seen in the past years, but at the start of the May sentiment reversed (just like the "V" shape bottom in the equity markets back in December) and now sits at around 70%.  Based on the chart, sentiment has room to incease, implying that corn prices have room to increase as well. 

Another data point showing the reversal put on by the Smart Money...net position went from a negative 200,000 to a positive net position of 200,000.

All the data points to continued higher prices for corn because the Agriculture sector is truly supply and demand. 

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.

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