Column: Funds add length in CBOT corn, soy before late-week downturn in prices

Corn is loaded into a truck to be transported for ethanol production in Kelley, Iowa
Corn is loaded into a truck to be transported for ethanol production in Kelley, Iowa, U.S., January 21, 2020. REUTERS/Shannon Stapleton

NAPERVILLE, Ill., Dec 4 (Reuters) - Speculators bought Chicago corn, soybean and soybean product futures and options during the last few days of November, a reversal from the prior week’s moves, though bulls may have pitched some positions late last week amid heavier losses in soybean oil and corn.

Most-active CBOT corn and soybean futures both rose about 2% in the four-day week ended Nov. 29, and money managers added roughly 20,000 futures and options contracts to each of their respective net longs.

That resulted in a corn net long of 191,631 futures and options contracts, a three-week high. Money managers’ soybean net long rose to 102,104 contracts, also a three-week high, based on Friday’s data from the U.S. Commodity Futures Trading Commission.

Managed money net position in CBOT corn futures and options

Funds covered gross shorts in both corn and soybeans through Nov. 29, though the addition of new longs was the more prominent feature.

Open interest in corn futures and options was down 14% on the year as of Nov. 29, and for soybeans it was down 9%. However, those are off 30% and 42%, respectively, from the same week in 2020, when open interest for both was at record highs for the time of year.

Corn futures lost 3.5% in the last three sessions, on Friday hitting the most-active contract’s lowest levels since August before settling at $6.46-1/4 per bushel. New-crop December 2023 corn ended below $6 for the first time since August.

Soybean futures lost 1.4% between Wednesday and Friday as disappointment over U.S. biofuel targets was partially offset by increasingly poor weather for Argentina’s crop, a smaller canola crop in Canada and strength in soymeal.

CBOT soy product futures were up in the week through Nov. 29, soyoil to a larger degree at 2%. Money managers expanded their soyoil net long by more than 5,000 to 105,503 futures and options contracts, and they added more than 3,000 meal contracts to lift their bullish soymeal views to 74,861 contracts.

CBOT soybean oil futures fell more than 6% on Thursday alone, and the day’s total trading volume was the third-largest in more than a decade, signaling that many soyoil bulls may have pulled the plug last week. The other two days were Nov. 23, 2016, and Feb. 13, 2018.

Most-active soyoil lost 10.6% in the last three sessions, ending at 65.22 cents per pound on Friday. Part of soyoil’s strength over the last year or two has been tied with ideas that biofuel use will significantly rise in the coming years, which was not exactly reflected in the U.S. volumes proposed last week.

Soymeal futures added 4% between Wednesday and Friday, reaching a one-month high on Thursday of $426.50 per short ton.

CBOT wheat futures fell 3.6% in the week ended Nov. 29, and the managed money net short reached yet another recent max of 54,068 futures and options contracts, the largest since May 2019. That was an increase of less than 1,000 contracts on the week.

CBOT wheat dropped nearly 3% on Friday, reaching the lowest price since Aug. 19, then settling at $7.61 per bushel. Both CBOT wheat and corn faced heavy pressure on Friday as U.S. export demand is slim and cheaper Black Sea supplies have commanded the global market.

Karen Braun is a market analyst for Reuters. Views expressed above are her own.

Writing by Karen Braun Editing by Matthew Lewis

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As a columnist for Reuters, Karen focuses on all aspects of the global agriculture markets with a primary focus in grains and oilseeds. Karen comes from a strong science background and has a passion for data, statistics, and charts, and she uses them to add context to whatever hot topic is driving the markets. Karen holds degrees in meteorology and sometimes features that expertise in her columns. Follow her on Twitter @kannbwx for her market insights.