According to the latest Commodity Futures Trading Commission (CFTC) Commitments of Traders (COT) disaggregated report, commodity funds were shown to have held a mostly neutral futures and options position in the soybean market as of December 31st. Funds were shown to have been net-buyers of 29,997 futures and options contracts in the soybean market in the last week of December to bring the group’s net position to a slight net-short position of just 3,159 contracts. As recently as mid-month, funds were shown to have held a combined net-short position totaling 112,528 contracts, which was the largest net-short position held by the group since holding a position of -129,994 at the end of May.
Recent progress in trade discussions between the U.S. and China which have resulted in what appears to be the first phase of a trade agreement is likely the key driver of the recent buying spree, but one cannot rule out some potential taking of profits on earlier positions ahead of the end of year as well. With commodity funds at a now neutral position, the market will look for fresh supply and demand factors to determine whether the next move will be for the group to switch to a net-long position or revert back to favoring the sell-side of the soybean market. Commodity funds’ ability to drive futures prices will keep the market focused on weekly updates from the CFTC to gauge the group’s activity in the soybean market.