Column-Funds shave bullish CBOT bets early on in weather-driven rally -Braun

NAPERVILLE, Ill. (Reuters) – Chicago grain and oilseed futures rallied in historic fashion last week as hot and dry August forecasts threaten to curb U.S. crop potential, but speculators had not materially changed their easing bullish views a couple days into the price spike.

Like many others in recent months, the week ended July 26 featured “round trip” price action, where CBOT corn and soybean futures fell sharply then rose again within the period. That muted overall speculative activity for the week, which had been well reflected in trade estimates.

Below average open interest has likely toned down the buying and selling, and that has been especially blatant in CBOT wheat with small fund moves despite extreme price swings. Open interest in CBOT wheat futures and options as of July 26 was down 5% from a year ago but down 13% from the same date in 2020.

The one- and two- year open interest differences are the strongest in CBOT soybeans, down 18% and 25%, respectively, and for corn they are down 8% and 7%.

Most active corn and soybean futures rose 0.9% and 1.9%, respectively, in the week ended July 26, though they had both been down more than 5% during the period, reaching the lowest levels since late 2021.

Data from the U.S. Commodity Futures Trading Commission on Friday showed the managed money net long position in CBOT corn futures and options shrinking by less than 5,000 contracts through July 26 to 120,788 futures and options contracts, mostly on the reduction of longs.

Money managers shaved 156 contracts off their net long in CBOT soybean futures and options, which reached 87,676 contracts after a small number of longs and shorts were added.

Funds sold CBOT wheat futures and options for a tenth consecutive week through July 26, raising their net short to 10,391 contracts from 6,816 a week earlier. Most-active futures fell 1% in the week.

Across CBOT corn, wheat, soybeans and soy products, Kansas City wheat and Minneapolis wheat, money managers expanded gross shorts by 5% in the week ended July 26 but also bumped longs up by 1%. Gross longs and shorts are both below average for the time of year, though longs contracted by 20% in the latest four weeks.

Funds were likely buyers late last week, particularly in soybeans and soybean oil, as futures rallied sharply on the hot, dry U.S. weather outlook and uncertainty over Ukraine’s grain exporting future.

Most-active CBOT soybeans rose 6.1% over the last three sessions while soybean oil added 13.3%, reaching one-month highs Friday. CBOT soybeans surged nearly 13% in the six sessions ended Friday, the most-active contract’s biggest such percentage rise since October 2009.

CBOT corn added 3.2% between Wednesday and Friday, but gains in most-active wheat and soybean meal were lighter at 0.5% and 0.2%, respectively.

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

Editing by Sam Holmes

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