Managed Money holding huge CBOT oat short

Posted on Monday, August 15th, 2016 at 4:34 pm News Stories.

Managed Money (MM), the proxy for fund trading, is holding a huge net short of 1,717 contracts (see below). This is the largest net short since June 2010 when MM held a short of 3,043 contracts. MM liquidated over 74% or 2,242 of that short in just seven days that year, with oat futures climbing $.25 usbu in the same period.

We doubt the funds will add significant length to current short oat positions as they are already holding 22% of total OI. Most major analysts are indicating corn and wheat futures have formed a seasonal bottom which further suggests limited fund selling of oats is expected moving forward.

We doubt however that oat prices will post any major rally.

At some point the MM will exit their short and prices could spike in that period but unless global cereal fundamentals shift bullish, or Canadian oat harvest is a disaster, any oat rally will be short lived.