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Veteran Advisor

Re: a chart to keep you awake

corn comm. are -281k contracts...least short since last June price low when they got to -270k.....these numbers only compare to winter/spring of 2010 when they got to less than -250k.

       also, open interest is 12.5% higher than last June.

 

these #'s compared to fall of 2010 when comm were over 700k short and spring 2010 = -550k

 

Anyone have thoughts on these numbers?

 

thanks.

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Honored Advisor

Re: a chart to keep you awake

I have some thoughts CX but the commercial hedge position numbers can get extremely small as we approach the end of the drought  marketing year with no carryout. No idea how that fits into today's situation other than to say that might make it abnormal and thus less predictive. It would be wise to deduct the short open interest in the Dec as it reflects new crop and not the July carryout situation.

 

You might go back and look at com hedge short position and its action in spring/summer of 1984 as a reference point.

 

The other thing that should be of concern is the fact that basis for old corn has NOT increased. It has been stable, but no push to generate supplies. This would not be happening if the USDA numbers were wrong. Basis needs to catch fire to trigger a squeeze and so far it has not.

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Veteran Advisor

Re: a chart to keep you awake

r u saying comm tend to lighten up on shorts @ end of drought?....or their total open interest as % of total OI?

 

appreciate u saying basis hasn't increased (that would be cash minus prompt month, yes?)

 

the May/Jul is staying firm in Corn and taking off in Beans, however.

 

THANKS

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Honored Advisor

Re: a chart to keep you awake

What I was really trying to say was that with such a low carryout, there isn't any inventory to hedge, and therefore the numbers versus 2009 or 2010 or 2011 might not be as predictive as normal. Comm short hedges always tend to max out at harvest and trend lower as supplies are reduced that need to be hedged.

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Veteran Advisor

Re: a chart to keep you awake

Thanks time,

 

 interesting also, even with lower carryout, total OI up 13% from last yr.--similar date-- yet comm (long & short) hold 2-3% MORE than last yr as a % of TOTAL OI.

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