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Hedge funds record short on grains

Hedge funds hold record short positions on grains going into the new year and a market analyst says that could help spark a rally.

Mark Schultz is with Northstar Commodity.

“When you have a rather sizable short position in corn, soybeans, and wheat; a record level when you add those three together, it sets the stage that if you could get some sort of a little weather issue, you could get into some short covering and see a market that starts to rally.”

He tells Brownfield the rally in wheat futures Tuesday was weather driven and provided spillover support to corn and soybeans.

“But we’re a long ways away from creating something that’s any type of significant weather issue.  But any time the funds are that heavily short, (there’s) an opportunity to at least see something give you a rally back to the upside.”

Net short positions have steadily increased to an unprecedented 331,777 contracts for the top 13 U.S. traded agricultural commodities, meaning traders expect the value of these products to fall.