Big Spec Funds Net Corn Position: How Important Is It?
- Wright team
- Mar 20
- 3 min read
By Roger Wright. Sent to Wright on the Market Clients 9 February 2025
The big spec funds (aka managed money) have bought a very large number of corn futures contracts the past six months and still hold a very large long position (make money if price goes up). As a result, “everyone” was anxious to see Friday afternoon’s Commitment of Traders (COT) report.
The COT reports the number of futures contracts traded on the futures markets in the U.S. for the week ending the close of business the previous Tuesday. That includes the number of contracts bought, sold, and currently held by the big specs, commercial traders (aka hedgers), index funds, and small traders. There are about 300 big spec funds trading corn according to the COT report.
The long corn position held by the big spec funds is larger than it has been for years. It was assumed they added to their long position this past reporting week, but more importantly, how many contracts did they add? How close are they to the largest long position they have ever held? From a technical analysis standpoint, that is a very important piece of information.
Reuters News Service’s Global Ag Report, Karen Braun, reported on “X” (formerly Twitter) Friday afternoon (paraphrased):
“Money managers' massive gross long position in CBOT corn futures & options positions which, at 447,897 contracts as of Feb. 4, is RECORD large in dating back to 2006.”
Most people, when they read that, including Roger, misunderstood what Karen wrote. The initial thought was the big specs added more than 140,000 contracts to their net position and had a record large net position. That was not the case.
Karen also reported:
"Money managers increased their net long in CBOT corn futures & options to 364,217 contracts in the week ended Feb. 4. That is on par with the same weeks in 2021 & 2022 and is funds' most bullish corn view since April 2022."
The key words are “gross long position” in the first sentence and “net long” in the second sentence.
The COT reports how many long contracts and how many short contracts each of the four trader groups hold. If the number of contracts long is more than the number of contracts short, that trader group is long.
Karen first wrote that the gross long position was a record large, while that may be true and is interesting, it is not very important. What is very important is how large the net position is. Karen correctly stated the big specs net corn position is long 364,217 contracts.
The last week in September 2010, the record big spec net long to date was set at 372,756 contracts. December corn traded to $5.28 that week, but the first week in November 2010, December corn traded to $6.05 with the big specs net long 349,813 contracts.
The current record net long was made 15 January 2021 at 435,357 contracts. March corn traded to $5.79 on 4 February that year after making a low of $3.31 on 12 August 2020. December 2020 corn traded to $3.20 on the 4th of August 2020. The big spec funds were net short 200,842 corn contracts that week.
On 10 August 2012, December corn traded to $8.49. The big spec funds net long position that week was 227,605 contracts.
In March 2007, the Commodity Futures Trading Commission (CFTC) separated the big spec funds and the index funds. We have tracked corn and bean open interest of those two funds ever since. In October 2020, we began recording the commercial traders open interest position as well.
When the net position of any trading group approaches the all-time record large number of contracts, the price trend is highly likely to change just before or just after, because there is much less buying or selling power left.
Records were made to be broken and every decade or so the record large long or short position is expanded because the number of contracts a trader can hold is expanded every few years, there is more money to invest every year, and the size of the crop grows over the years.
The below chart confirms the size of the net position of the big spec funds is not the “holy grail” of picking the top or bottom on the price cycle. Please look closely at the big spec net position compared to the price of corn at the same time.
To learn more about big spec funds and index funds, refer to our other posts:
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