After closing higher on Monday in reaction to the NCC plantings estimate, the market has since fallen over 200 points in just three sessions. While aggressive fund selling was given credit for this decline, the trade did its part by pursuing bearish options strategies ahead of tomorrow's USDA report.
Even though there was a decent amount of scale down fixation buying, it was not nearly enough to hold against the heavy onslaught of spec selling.
Volume was extremely heavy over the last couple of sessions, with 58'000 futures contracts changing hands yesterday and today's preliminary volume of 61'590 breaking the all time record set back in November.
Meanwhile, open interest continues to surge to from one record to another, counting 197'197 contracts as of this morning, which almost equals the size of the US crop. That's remarkable considering that we are in the midst of liquidating the March contract, but there seems to be no end to speculators raising their bets on both side of the market.
The latest NYBOT spec/hedge report as of Friday, February 2nd, showed that spec longs owned 9.28 mio bales, which were 0.52 mio bales more than the week before. On the other hand we had spec shorts with 9.49 mio bales, an increase of no less than 1.14 mio bales. This resulted in a net short position of just 0.21 mio bales or 1.1% of open interest.
The 'hedge' position showed that trade longs, which are mostly related to index funds, were up by 0.47 mio bales to 9.98 mio bales, while trade shorts were the only group to reduce their position last week by covering 0.15 mio bales, which resulted in a 9.77 mio bales short exposure as of last Friday.
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