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Column: Funds avoid heavy corn selling despite improving U.S. crop prospects

FORT COLLINS, Colo. (Reuters) - Speculators continue to weigh increasingly favorable weather for U.S. corn and soybeans against record July export sales for both crops, and it seems that the latter won out again last week, at least in the case of corn.

Corn is harvested near Austin, Manitoba, Canada March 23, 2020. REUTERS/Shannon VanRaes

Chicago-traded corn futures fell nearly 7% during July, but hedge fund managers have not materially changed their views toward the yellow grain since the first week of the month.

In the week ended July 28, money managers increased their net short position in CBOT corn futures and options to 143,280 contracts from 137,770 a week prior, according to data published Friday by the U.S. Commodity Futures Trading Commission.

That stance is nearly identical to the one from three weeks earlier, but it is far less bearish than their early June view of close to 300,000 contracts.

Funds added both longs and shorts in corn last week, and the number of outright longs reached the highest level since early March, before the coronavirus crisis hit the market. However, those longs are still relatively low for the time of year.

U.S. exporters sold more than 7 million tonnes of corn last month, which is the most for July in recent times and perhaps of all time. That was capped off on Thursday as China made its largest single U.S. corn purchase on record, ranking third of all time for any buyer.

But the weather has been largely ideal for U.S. corn crops in recent weeks, and it is possible that more bushels will be gained in yield than have been sold to China.

Soybeans still need solid rainfall through August to achieve big yields, and current forecasts suggest rainfall will likely be normal or above normal in most soybean growing areas this month.

Soybean futures rose a little more than 1% last month amid unusually strong U.S. export demand, though funds were slightly more bearish toward the end of the month than where they started.

Through July 28, money managers reduced their net long in CBOT soybean futures and options to 62,161 contracts from 75,809 in the week before. However, futures rose fractionally in the last three days of the month.

On the commercial side, the net short in soybeans is the largest for the time of year since 2016, and the net long in corn is the largest since 2013.

Last week’s fund buying in soybean meal was the second-largest move for grains and oilseeds behind their selling of soybeans. Through July 28, money managers cut their net short in soymeal to 19,464 futures and options contracts from 29,178 a week earlier.

Funds increased bullish bets in soybean oil during the same period by just 652 futures and options contracts to 37,549. Soyoil futures on Friday surged nearly 2% on increased biodiesel demand in the United States and investors likely made a substantial addition to their position.

Money managers made very slight changes to their wheat views through July 28, increasing their net long in CBOT wheat futures and options to 1,699 contracts from 474 a week earlier. They are thought to have continued the buying trend late last week.

In Kansas City wheat futures and options, funds increased their net short by 867 contracts to 19,026, and they raised bearish Minneapolis bets by 472 contracts to 21,125.

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

Editing by Matthew Lewis