CHICAGO (Reuters) - Speculators are not yet ready to ditch the wildly bullish wheat story, though they remain cautiously bearish toward Chicago-traded corn and soybeans.
In the week ended Aug. 28, hedge funds and other money managers cut their net long position in CBOT wheat futures and options to 51,180 contracts from 60,812 in the previous week, according to data from the U.S. Commodity Futures Trading Commission.
Funds also trimmed bullish bets in Kansas City wheat futures and options to 61,460 contracts from 64,373 a week earlier.
The winter wheat futures market started to get toppy early last month does as most of the worldwide wheat harvest concerns had already been priced in to the market. Still, through Aug. 28, money managers' combined net position in CBOT and K.C. wheat was the largest on record for the week at 112,640 futures and options contracts, narrowly edging 2012. (tmsnrt.rs/2MDFIh0)
Money managers continued to be all over the board in Minneapolis wheat futures and options through Aug. 28, slashing their net long to 2,565 contracts from 5,696 a week prior.
Speculative buying in the wheat market resumed last Wednesday on talks that No. 1 supplier Russia may soon limit its exports or impose a duty since its crop is likely much smaller than a year ago.
Wheat perked up again on Friday on short-covering ahead of the routine Sept. 3 meeting between Russia’s ag ministry and exporters and a smaller crop in top-five exporter Canada. Statistics Canada on Friday pegged the country’s wheat crop at 28.99 million tonnes, below pre-report trade estimates, USDA’s peg of 32.5 million, and last year’s crop.
Argentina’s currency crisis may have also supported grain futures late last week as news emerged that the government planned to announce a new set of economic measures on Monday, triggering speculation that the actions might include grain export restrictions.
Trade sources indicate that commodity funds were net buyers of wheat over the last three sessions.
Through Aug. 28, money managers boosted their net short position in CBOT corn futures and options to 56,957 contracts from 14,824 in the previous week, largely on fears the U.S. government had underestimated the size of the domestic corn crop.
Specs’ corn stance through Aug. 28 was very similar to a year ago, but it has likely diverged over the last three sessions. (tmsnrt.rs/2N5EZoh)
December corn futures jumped 2.7 percent on Friday, the contract’s largest single-day percentage gain since March 29 on robust demand for the U.S. product and short-covering ahead of the U.S. holiday weekend.
Trade estimates peg commodity funds as net buyers of the yellow grain between Wednesday and Friday, anchored by Friday’s activity. Over the last month, the market has generally underestimated the amount of corn bought by funds each week.
Industry estimates of the U.S. soybean harvest have continued to creep higher, but speculators hold a stance identical to two months ago. In the week ended Aug. 28, money managers extended their net short in CBOT soybeans to 53,642 futures and options contracts from 40,049 in the previous week, which was an outlier in the last nine weeks of data. (tmsnrt.rs/2MGoHCP)
November soybean futures dropped 6 percent during the period, the contract’s largest five-day decline since mid-July as U.S. supply is expected to balloon over the next year. Commodity funds were likely net buyers of beans over the last three sessions as futures rose 1.5 percent, however, mostly on technical buying and pre-holiday short-covering.
In the week ended Aug. 28, December soybean meal futures fell 6.9 percent, the contract’s largest-ever decline over a five-day period. Soybeans and especially soymeal have been under pressure as concerns brew that outbreaks of African swine fever in China’s hog herd could curb feed demand.
During that same time frame, money managers slashed their meal long to 27,449 futures and options contracts from 52,733 in the prior week. This was the funds’ largest weekly selloff in meal since March 2017, and the new stance is the least bullish since mid-January. (tmsnrt.rs/2MZLzN9)
Money managers also chipped away at their massive soybean oil short, which fell to 86,485 futures and options contracts from 95,209 in the previous week. Trade sources indicate that commodity funds were net sellers of soymeal and net buyers of soyoil between Wednesday and Friday.
Editing by Matthew Lewis