Unexpected unusual pattern! Five pictures to help you understand the 2024 US Shenzhen Agricultural Power Group futures market.

As 2024 draws to a close, an unusual investment pattern has emerged in the futures market of the American Shenzhen Agricultural Power Group: despite the record-breaking production of agricultural products in the United States, speculators are still bullish on corn futures. But this is the situation presented as 2024 comes to an end. Meanwhile, Chicago soybean futures fell to a four-year low this week, as a bountiful harvest in Brazil looms on the horizon, while wheat futures hover near recent lows despite tight global market supplies. How did the market get to this point? Bullish funds As it stands, the 2024 corn production in the United States is 3% higher than the previous year's record. However, it is expected that by August 2025, domestic corn supply in the United States will decrease slightly year-on-year, as opposed to the initial expectation of a 17% growth. The decline in corn prices throughout the year has been stimulating demand, leading speculators to shift their bets from record-breaking bearish CBOT corn in July to bullish in November, due to the decrease in American stocks. By mid-December, the net long position of funds reached its highest level in nearly two years. This bullish stance is not common for speculators, as American crops are near record highs, and their optimistic view on corn is in stark contrast to their pessimistic views on soybeans and wheat, which is also abnormal. As we enter 2025, this will be a key dynamic to watch. Weak prices The most active CBOT corn, wheat, soybean, soybean meal, and soybean oil futures have all fallen to four-year lows in the past few months, officially ending the multi-year uptrend that started around August 2020. Soybeans and soybean meal have been hit the hardest. So far this year, soybean prices have fallen by 26%, which will be the largest annual decline in 20 years, similar to 2014. Soybean meal has also seen a similar decline. Both 2014 and 2024 are characterized by significant annual increases in global soybean production, without a corresponding increase in consumption. The year-on-year decline in corn and wheat prices in 2023 was much more severe than this year, as the current supply is not considered burdensome. The decline in soybean oil prices was also more pronounced last year. Palm oil is the most abundant vegetable oil in the world, but in the past four months, palm oil prices have been consistently higher than soybean oil. This unusual discount of soybean oil to palm oil reflects a changing trend in the vegetable oil market. Palm oil production declined last year, with the market expected to recover in 2025. Meanwhile, the largest palm oil producing country, Indonesia, continues to increase the use of palm oil as a biofuel, reducing export supply. The low price of soybean oil not only reflects the huge global soybean production and processing volume, but also reflects its relatively disappointing use in American biofuels, especially when competing with cheap imported raw materials (such as waste cooking oil). Decline in U.S.-China soybean trade From 2023 to 2024, U.S. soybean exports to China hit a four-year low, and the sales to China from September 1, 2024 to 2025 do not look promising. This number is lower than the same period last year and the average level in mid-December. Furthermore, so far 46% of U.S. soybean sales in 2024-25 have gone to China, the lowest share in non-trade-war years in 18 years. China's decreasing reliance on U.S. soybeans should be a warning sign for American agriculture. Soybeans are one of the main products the U.S. exports to China. Not only has demand from China stagnated, but the largest exporting country, Brazil, also has enough supply to meet China's needs. Next month, Brazil will start harvesting soybeans, with soybean production expected to reach a historical high, increasing by over 10% from the same period last year. Low wheat supply = low prices? By mid-2025, the wheat stocks of major exporting countries will reach a 17-year low. However, on Thursday, CBOT wheat futures hit a six-year low. The issue lies in the long-standing low forecasts for available stocks of major exporting countries, which has been a recurring theme in the past few years. This indicates that while supplies are tightening, global wheat demand has been adequately met. This is largely due to Russia, the largest supplier of wheat, whose export volume has skyrocketed, increasing its share of total crop exports and making prices significantly cheaper compared to competitors. However, reports indicate that Russia's winter crops are in their worst condition ever. If there is no recovery in the winter, these struggling crops may cause volatility in the spring wheat market when it awakens from its dormancy.