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Column: Funds continue to trim CBOT longs, though the wheat bulls may be back

FORT COLLINS, Colo. (Reuters) - Speculators’ optimistic views of Chicago-traded corn and soybeans remain at historically high levels despite continued light selling last week, and although the wheat bulls had recently gone dormant, they have likely burst back onto the scene over Russian supply concerns.

A combine harvests wheat in Corn, Oklahoma, U.S., June 12, 2019. REUTERS/Nick Oxford/File Photo

In the week ended Dec. 8, money managers reduced their net long in CBOT soybean futures and options to 185,655 contracts from 194,683 a week earlier, according to data from the U.S. Commodity Futures Trading Commission.

That is funds’ least bullish soybean view in three months, and like the prior three weeks, the move incorporated both new shorts and the exit of longs. Investors’ net soybean long hit its latest peak on Oct. 6 with 238,394 futures and options contracts.

Traders in the “other reportables” category were slight net buyers of soybeans in the latest week, and their net long is very close to the recent maximum. Other reportable traders’ net long in corn is near both recent and all-time highs, but money managers’ corn stance has not faded as much as their soybean one.

As of Dec. 8, the managed money net long in corn futures and options stood at 269,583 contracts, down just 1,050 contracts on the week after both longs and shorts were added. That position was recently as large as 290,080 contracts on Nov. 3.

Funds were seen as modest buyers of corn and soybean futures between Wednesday and Friday with most-active futures both up around 1% during the period.

The U.S. Department of Agriculture on Thursday cut already-thin expectations for domestic soybean carryout, and it reduced Argentina’s corn and soybean crops. U.S. corn supply was unchanged, but traders were satisfied with the agency’s acknowledgement that China would likely import more corn than it had previously projected.

Brazil’s corn and soybean harvest expectations were not reduced as was predicted, but similar to Argentina, the start to the growing season was dry in many key areas and the precipitation forecast continues to be spotty enough to maintain the uncertainty.

Soybean oil futures were the only CBOT grain or oilseed contract for which price strengthened in the week ended Dec. 8, but the selloff was the largest. Money managers cut their net long in bean oil futures and options to 89,063 contracts from 104,715 in the prior week.

Funds continued selling soybean meal through Dec. 8, reducing their net long to 62,642 contracts from 70,386. Soymeal futures fell by more than 3% in the period, the largest decline among the grains and oilseeds. Investors were pegged as light net buyers of both soy products over the last three sessions.


Money managers increased their net short in Chicago wheat futures and options to 5,692 contracts through Dec. 8 from 4,397 a week earlier, though they are expected to be comfortably back in bull territory due to supportive news out of Russia late last week.

Russian officials on Friday were reportedly considering imposing a wheat export tax for Feb. 15-June 30 in an effort to stabilize domestic prices. Russian agriculture consultancy Sovecon also slashed the top exporter’s 2021 wheat harvest to 76.8 million tonnes from the previously forecast 81 million since the crop is in the worst shape in over a decade.

USDA on Thursday cut global wheat supplies for 2020-21 against market expectations that they would rise, also providing fuel for the bulls.

Most-active CBOT wheat futures surged 7.8% over the last three sessions, their biggest three-day percentage rally in five months. The contract on Friday moved above $6 per bushel for the first time this month, hitting more than two-week highs after reaching two-month lows a week ago.

Commodity funds were predicted to have bought 42,500 CBOT wheat futures contracts between Wednesday and Friday, though the estimates have had a recent tendency of overestimating the larger moves, and the trading volume was not necessarily standout. Open interest in the last few weeks has been below average for the time of year.

On the flip side, open interest for both corn and soybeans in the last couple of months has been particularly elevated for the time of year. In the case of soybeans, it remains close to all-time highs.

Through Dec. 8, money managers reduced their net long in Minneapolis wheat futures and options to 2,538 contracts from 4,755 a week earlier, their sixth-consecutive selling week and the heaviest one of the streak. But they bumped up their net long in Kansas City wheat by just 268 contracts to 44,774 futures and options contracts.

The opinions expressed here are those of the author, a market analyst for Reuters.

Editing by Matthew Lewis