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Commodities

Column: Funds buy CBOT corn as U.S. crops face hot, dry stretch

FORT COLLINS, Colo. (Reuters) - Speculators for the past few weeks had been retreating from their highly bullish bets in Chicago-traded corn, but U.S. weather uncertainties and strong export and domestic demand had them rethinking that trend last week.

FILE PHOTO: Clouds hover above a corn field in Dubuque, Iowa, U.S., July 26, 2018. REUTERS/Joshua Lott/File Photo

Money managers increased their net long position in CBOT corn futures and options in the week ended June 1 to 289,936 contracts from the five-month low of 268,091 contracts in the prior week. That is based on Friday’s data from the U.S. Commodity Futures Trading Commission.

The move marked money managers’ first net buying week in corn in seven weeks. Index traders boosted their total number of positions by 4% in the week, other speculators were very modest sellers, and commercial end-users’ gross shorts rose by the largest degree since January.

Most-active July futures rose 11% in the shortened trading week through June 1 and new-crop December jumped nearly 12%. The surge was primarily on dispelled rumors that China was cancelling additional U.S. corn cargoes and ideas the Asian country was actually booking more grain.

Weather forecasts for the young U.S. crop have suggested hot and dry weather until at least mid-month, though the rainfall forecast has been variable. Still, the outlooks promoted enough uncertainty between Wednesday and Friday to boost new-crop futures 2.5%.

Traders are also eyeing a comeback for the U.S. ethanol industry, which in the latest three weeks churned out an average of over 1 million barrels per day of the corn-based biofuel, close to pre-pandemic levels.

SOYBEANS AND WHEAT

Money managers barely adjusted their views in CBOT soybeans and soybean oil much in the latest week. As of June 1, their soybean net long stood at 138,788 futures and options contracts, down fewer than 1,000 on the week. They extended their net long in soybean oil by fewer than 1,000 contracts to 86,084.

Most-active soybean meal futures rose more than 3% through June 1, more than the rest of the soy complex, but money managers reduced their net long to 20,885 futures and options contracts from 25,232 a week earlier. That is their least optimistic stance in nine months.

Meal futures dropped fractionally in the last three sessions, but July soybeans were up 2% and new-crop November rose 3%, aided by the dicey U.S. weather outlook and near-record strength in soybean oil futures.

Most-active soybean oil on Friday ended at 71.34 cents per pound, an all-time high settle. Booming global vegoil demand and an expected tightening in soyoil supplies over the next year have kept futures at historic levels.

U.S. weather fears have renewed strength in wheat futures after a slide in May. CBOT July wheat jumped 5.6% in the week ended June 1, but money managers shed about 1,300 futures and options contracts, reducing their net long to 3,227.

Kansas City wheat futures featured similar gains through June 1, and money managers cut bullish bets to 19,086 futures and options contracts from 23,501 a week earlier. Minneapolis wheat futures surged 13% during the week, though funds trimmed about 1,200 contracts from their net long, which fell to 13,462 futures and options contracts.

CBOT and K.C. futures were down fractionally at the end of last week, but Minneapolis July wheat was up more than 5% on unfavorable conditions for spring wheat in the U.S. Northern Plains. High winds accompanied temperatures of at least 100 degrees Fahrenheit (38 Celsius) on Friday afternoon in North Dakota, which is already parched from drought.

Minneapolis July futures settled at $8.10-1/4 per bushel, their first close above the $8 mark since July 2017, when the contract was in delivery.

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

Editing by Matthew Lewis

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