“The system is broken. Why are the funds so negative towards corn? They are ruining everything!” This is my summarization of a recent vent from a peer in the industry.
The frustration is real. Agricultural social media is filled with one negative rant after another lamenting the lack of a summer corn price rally thus far, and the hefty short fund position that continues to grow, keeping corn futures prices on the defensive.
What’s happened
The funds. The big investment money that trades in commodities. Fund managers watch and monitor grain market fundamentals and technical chart aspects, as they look for opportunities to invest and make money.
When they are long (buyers) in the grain market, prices tend to trade higher, and there are usually underlying friendly fundamental components supporting grain prices, too. When funds are short (sellers) in the market, it is often due to grain supply and demand fundamentals that are shifting to bearish.
From a marketing perspective
Currently old crop carryout for corn is tight. The June 12, 2025, USDA report was supportive as USDA cut 2024-25 ending stocks by 50 million, bringing that number to 1.365 billion bushels, (25 million bushels below expectations) as export demand was raised 50 million, bringing it to 2.650 billion bushels.
This is friendly news, so why hasn’t corn rallied? The industry thinking is that new crop supplies will be “good enough.” The USDA pegs 2025-26 ending stocks at 1.750 billion bushels, and that is assuming a 181-bpa nationwide average yield. The perception of larger supplies is keeping new crop corn futures below $4.50/ bushel as of this writing.
Currently, fund traders seem to believe the U.S. farmer will be able to achieve record yield, and that U.S. supplies of corn will grow to a comfortable level come harvest.
Thankfully, the government each week requires the funds to disclose the number of positions they bought or sold during the week. From there, we can track whether they are amassing a long position in the market or a short position.
Due to the notion of “good enough supplies,” managed money fund traders continue to increase their short corn position. As of the June 10 Commitment of Traders Report, they were short a whopping 164,020 contracts.
While past performance is not indicative of future results, it seems that unless a surprise weather issue pops up later this summer, managed money fund traders may be tempted to continue to further build a hefty short position. Which, if true, would likely weigh on new crop corn prices even more, similar to what occurred last year at this time. How many short positions can they encompass? Well, last year they were short approximately 350,000 contracts by early August 2024, and corn prices sank lower to a sub $4 price point.
Prepare yourself
As of right now, it seems that it may take a dramatic weather event, further war issues in the Middle East (which would make crude oil prices rally) or a sudden burst of friendly demand news to get the funds to buy back, or exit, the hefty number of short positions they currently possess in the agriculture space.
Or, potentially, might they want to show profits for the end of the second quarter? If so, might they buy back short positions during the final days of June in order to show profits on their books?
Hard to say for sure what might inspire the funds to trade in the future. But one thing is for sure, monitoring the weekly positions and trends of the funds is an important aspect of agricultural commodity price management.
Reach Naomi Blohm at 800-334-9779, on X: @naomiblohm, and at naomi@totalfarmmarketing.com.
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