While the near month contracts are pricing in a tightening market due to strong demand and dwindling output from Brazil, the new crop months, i.e. those that reflects market conditions following the northern hemisphere harvest are still pricing in softer prices this autumn. December corn currently trades 19% below the soon to expire May contract while the November soybean contract trades 13% below the May contract.
Whether these lower prices can be achieved all depends on weather developments during the coming months. To assist traders in determining the outlook they will be watching data on exports as China attempts to reduce its reliance on foreign grains while also seeking to reduce the amount of corn and soymeal in animal feed. In addition, weekly planting progress reports, published on Mondays and later into the summer months, the weekly crop condition report will be watched closely.
How speculators respond to these developments over the coming weeks and months could have a significant impact on prices. Overall speculators have during the past six months maintained an almost unchanged but near record exposure in corn, soybean and wheat futures between 540k and 560k lots, representing a nominal value of close to $25 billion. In the latest reporting week to April 20, bullish corn bets saw a small reduction from a ten-year high, the wheat position flipped back to a net long while soybeans saw the biggest one week jump in net longs since September.