Ag Markets 2024: Watch the Funds Closely

John Heinberg is Market Advisor with Total Farm Marketing. He tells SFN there are a few key things to watch for in the new year. The first is money flow. He says funds continued to sell the ag sector at a rate that’s raising eyebrows.

You know, a big part of the agricultural prices and how things move in terms of price is the way the money moves and the investment accounts have managed money positions and things of that nature and that’s something that’s really been kind of coming into play here. I think in terms of the port pressure in the agriculture sector, as the money has been aggressively been selling from the Ag space overall, not just the grains, the livestock sector as well as well, some of the SOPs that are out there, and we’re seeing the fund position continue to grow and in fact, and now we’re at their shortest they’ve been in the ag sector and about three and a half years. In terms of their actual money float.

Heinberg says that action is tied to a couple of different factors.

First off in the green sector. Corn had a rough year we’re down about 30% year over year and the value of the corn price a lot of that is also tied to the large supply picture that we’re seeing here in the US that’s projected. We’ll see how things go as we go forward. The concerns regarding demand. big factor in that as well as the funds have pushed that corn market fairly aggressively on 170,000 180,000 short contracts. Last week. It’s the largest position since realistically the COVID low back in 2020. And right now doesn’t seem to be a whole lot of put need to get out of there. Another big factor the anti-inflation mindset, we’ve seen inflation Calm down, the action of the Fed, the loosening of the US dollar, those things all kind of come into play. And those are things that are anti in terms of commodity price at this timeframe, and the money seems to be still staying on that path.

Predicting how long these positions may stay requires a crystal ball.

Realistically, and especially in the grains, it comes down to the fundamentals and what’s going to make them want to get out of that short position, whether it’s on the news front, obviously, you know, we had the Ukraine war here a couple of years ago that helped fire things up move money into the grain sector and the concerns regarding global production. A strong weather event would be a big factor obviously we got with weather going on in Brazil right now which seems to be improving. So that’s only added to the selling pressure here, you know, over the last couple of weeks.