Forexpros – Soybean futures pared gains on Thursday, pulling back from a daily high as markets awaited the release of a key monthly report on U.S. and global grain supplies. Here is the latest chart detailing the relationship between the Hedge funds NET POSITIONING in the Comex gold market and the price of the actual metal. This can be seen in the return of some hedge funds to the long side of the gold market at the Comex ( although I should note that the gold ETF, GLD, continues to display an amazing lack of interest on the part of big Western-based institutional buyers ). A similar level of hedge fund exposure to the gold market back in January 2013 had gold sitting above $1650! It is especially tragic that we do get something like the Greece thing this week and not next week.
But one does wonder how much buying it is going to take on the part of the hedge funds to really push this market to the point where it actually can do something the least bit exciting; not with this many willing sellers of the metal around. As noted many times when discussing the prospects of this metal – just because a market has found a bottom does not mean it is about to embark on a wildly bullish tear higher. As noted in yesterday’s comments, making too much of moves in ANY market at this time of the year is the height of folly.
There are huge air pockets above and below every market that is trading right now with so many large players out of the markets until next Monday that anyone who has a hankering to try their hand at market manipulation ( pushing prices around merely to run stops ) is going to give it a try to see if they can pull it off. Sadly, the exchanges will never do the right thing and just shut down the markets for the last week of the year because they are too greedy trying to collect more trading fees.
USDA issued its December Supply and Demand report today and as usual, it set off some expected reactions across the grain floor. Instead USDA upped usage reducing the amount of corn leftover to 1.998 billion bushels. They came up with an additional 10 million bushels worth of demand from that sector ( note that it includes the feed sector but based on what I can see, USDA had already factored in the livestock and poultry industry numbers last month. Beans did sell off on the data however as the market has already priced this in due to the huge rally off the lows that we have been seeing which began back in October.
However, what USDA did do was to lower the total global carryover from 90.28 million metric tons to 89.9 million. That would be friendly as well on the surface but the trade was expecting a smaller S. American crop as thus a smaller number on that global carryover than USDA gave it. The man Rupert Murdoch is not as conservative as his own network Fox News would imply.