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Column: Funds, index traders carrying big longs in CBOT corn and soybeans

FORT COLLINS, Colo. (Reuters) - Speculators have maintained heavily bullish bets in Chicago-traded corn and soybeans for at least a month now as the supply picture grew significantly tighter than anyone expected. But other market participants have also been very active lately, adding to the overall optimism.

Roger Hadley looks out through the windshield of his John Deere combine at his corn fields on his corn and soybean farm in Woodburn, Indiana, U.S., October 16, 2020. REUTERS/Bing Guan

As of Nov. 17, the managed money net long in CBOT corn futures and options was at 278,889 contracts, a decrease of less than 2,000 contracts from the prior week. Corn futures had fallen fractionally during that week, but heavier fund selling had been expected.

Data from the U.S. Commodity Futures Trading Commission also showed a reduction in the funds’ soybean net long to 208,774 futures and options contracts in the week ended Nov. 17. That compares with a net long of 221,094 contracts a week earlier.

Investors’ bullish soybean view is basically the same as eight weeks ago, though most-active futures have risen 16% or more than $1.60 per bushel since then.

Corn futures are up by the same percentage, representing 59 cents per bushel, but funds were far less bullish several weeks ago. Their net long in corn was just 95,912 futures and options contracts on Sept. 22.

Money managers are not the only ones placing big bets on corn and soybeans. Traders in the ‘other reportables’ category drastically increased gross soybean longs in the two latest weeks, and their corn net long at the end of October came within less than 2,000 contracts of the all-time high set in early 2018.

When combining the managed money and ‘other reportables’ views, the resulting net soybean long has been hovering at record highs for nearly two months. The combined corn net long has been above 400,000 contracts since late October, slightly off the record levels observed in late 2010 and early 2011.

Index traders have shown a particular interest in corn since mid-October, with the combined number of gross longs and shorts up 30% since then. Outright longs numbered 542,021 futures and options contracts as of Nov. 17, just 200 off the all-time record set exactly 10 years earlier.

Index traders’ gross soybean longs hit a record on Oct. 20 and there has not been significant pullback since then.

Corn open interest as of Nov. 17 was up 17% since mid-October, last week reaching the highest level in more than a year and easily the highest level for the time of year since 2010. Soybean open interest rose 11% in the two weeks ended Nov. 17 and is very comfortably the largest for the time of year, but it is off mid-October’s all-time high.

Commodity funds were seen as net buyers of both corn and soybean futures over the last three sessions as most-active futures rose 2% and 1%, respectively. Deferred contracts were weaker, with November 2021 soybeans and December 2021 corn up just 0.2% each.

Both most-active contracts hit milestones on Friday. Soybeans reached $11.96-3/4 per bushel, the highest since June 13, 2016, and corn touched $4.33-1/4, its highest since July 24, 2019. Tightening supplies, strong demand and dryness concerns for South American crops continued to be in focus late last week.

WHEAT AND SOY PRODUCTS

Chicago wheat futures continue at elevated levels for this time of year, but they have come off the mid-October highs, and speculators have been heavier sellers in the latest two weeks. Through Nov. 17, they reduced their net long to 14,414 futures and options contracts from 32,633 in the prior week.

Traders have been weighing concerns over exportable supply in top countries such as Russia with the expectation for record global production and stocks. Futures were up fractionally between Wednesday and Friday, and commodity funds were pegged as light buyers.

Funds’ Kansas City wheat views were barely changed for the second consecutive week, as they expanded their net long by 638 futures and options contracts to 47,967 through Nov. 17. But they trimmed their Minneapolis wheat net long by 747 contracts to 6,061.

Investors have not held a net short in the CBOT oilshare since April, and their net long reached a two-month high last Tuesday. The oilshare measures soyoil’s share of value in the soy products.

Tight supplies continue to be a concern for global vegetable oil markets. Most-active soybean oil futures surged 4% in the week ended Nov. 17, and money managers raised their bullish stance to 103,778 futures and options contracts from 97,111 a week earlier.

Futures rose another 3% over the last three sessions, reaching 39.32 cents per pound on Friday, the highest for the most-active contract since July 2, 2014.

Soybean oil futures are influenced by price trends in competing vegoils. Malaysian palm oil futures on Thursday hit the highest level for the benchmark contract since May 3, 2012, but traders are also monitoring a potential pullback in global vegoil demand given soaring prices and increasing coronavirus infections.

Money managers eased bullish views in soybean meal through Nov. 17, reducing their net long to 78,486 futures and options contracts from 83,798 a week earlier. Futures fell fractionally between Wednesday and Friday, but funds are still expected to be holding a record-large meal long for the time of year.

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

Editing by Tom Brown

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