Funds gain influence in corn price formation.

The behavior of agricultural commodity prices does not always immediately follow the fundamentals of supply, demand, weather, and stocks. According to Maria Flávia Tavares, an economist and PhD in agribusiness, the positioning of funds in the futures market can also exert a significant influence on prices.

On September 1st, hedge funds reached the highest volume of corn purchases ever recorded in the CFTC's historical series. This movement represented the highest level of capital concentrated on the same side of the market since 2011, indicating strong investor exposure to rising corn prices.

Ten days later, the USDA released a report with figures considered favorable to prices. Even in this scenario, corn prices fell. In Maria Flávia's assessment, the reaction was not linked to the weather, the harvest, or stocks, but to the positioning of financial participants.

Traditional analysis of the commodities market often prioritizes reports such as WASDE, weather conditions, and export performance. However, price formation also involves algorithmic funds and CTAs, which execute operations following trends and automated models, without necessarily directly considering crop conditions.

Another observed trend is the attempt by new participants to enter this environment. Kalshi even listed corn and soybean price contracts this year, but backed down after a reaction from the agricultural sector. Now, it has a request under review by the CFTC to offer perpetual corn and wheat contracts, which has not yet been approved.

For Maria Flávia, fundamentals continue to be important, but they need to be analyzed in conjunction with financial flows and the positioning of market participants. She presents this approach in lectures aimed at producers, cooperatives, and marketing teams, focusing on understanding the different factors that influence agricultural price formation.