I have exited my trades in agricultural commodities. I had shorts in corn, soybeans and sugar. Soybeans were flat; a small loss in corn was offset by a small gain in sugar.

Over the past week, I have become more concerned about planting delays for US corn and soybeans (the US is the biggest producer and exporter of corn by some margin). I shorted both markets after a report at the start of last week that showed planting had accelerated — and there was already a lot of concern in the market — and on a longer time-frame, I was betting on poorer liquidity conditions and mean-reversion in growing conditions. However, this week’s report was less rosy, bad weather is continuing, and farmers do not appear to be planting soybeans instead of corn (and in only a couple of weeks they will be able to claim insurance for fields they have not been able to plant). Also, on a generalised risk-off day yesterday, corn and soybeans did not fall, which bodes ill for the idea of using these markets to play reduced liquidity. I entered these trades at the point I did because I thought the frothy markets could be turning around, but the slowdown in plantings on continued bad weather has made that less likely. I am pleased to have got out pretty much flat — that is vindication of my view that markets had priced in continued bad weather in the short term.

I also shorted sugar last week, seeing an opportunity in the recent run-up in prices to get into a downtrend that I should have gone into much earlier in the year (I didn’t because I was working on revisions to my trading process). However, reports of short-term, but significant, tightness in the sugar market have made me wary of betting on a continued downtrend.

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