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Funds forge most bearish CBOT wheat view since 2019, corn selling eases

Chicago wheat futures are significantly lower than earlier this year when conflict broke out between top Black Sea exporters, though speculators’ views have grown increasingly bearish despite an easing in prices.

In the week ended Nov. 22, money managers increased their net short position in CBOT wheat futures and options to 53,402 contracts from 46,780 a week earlier. That marked funds’ most bearish wheat stance since May 2019, according to data from the U.S. Commodity Futures Trading Commission.

That data was published on Monday afternoon instead of Friday due to last week’s Thanksgiving holiday. Daily trading volumes for CBOT wheat, corn and soybeans throughout the latest period were well below normal for the dates, common during holiday weeks, and that muted fund activity.

Although open interest and trading volumes in wheat have recently been light, money managers’ gross short positions in CBOT wheat futures and options reached 106,384 contracts last week, the most since May 2019. Funds have added shorts now for seven straight weeks, removing longs in five of them.

Negative wheat sentiment is supported by poor demand for U.S. wheat and decent exports for Black Sea supplies, as Russia’s brief exit from the Ukraine export deal a month ago failed to spook increasingly bearish investors. China’s COVID-19 curbs accelerated downside momentum on Monday.

Most-active CBOT wheat futures since mid-November have been trading lower than the year-ago levels, the first such instance since mid-2020. Wheat reached its recent peak near $9.50 per bushel in mid-October but ended Monday at $7.80-3/4, the lowest since August.

Wheat was near $8.20 per bushel on the same date in 2021, weakening through most of December. The most-active contract has not traded sub-$7 since September 2021.

Money managers through Nov. 22 cut their net long in CBOT corn futures and options by about 6,000 to 170,767 contracts, their third straight week of selling. Exiting longs were the most prominent, but it is interesting to note that short covering was also present, reflecting market uncertainty.

That was a much less aggressive selling pace than in the first half of November, when money managers’ reduction of gross corn longs was the largest for any two weeks since July 2016. Their bullish corn views remain stronger for the date than in most past years, except for 2021 and 2020.

March CBOT corn futures ended unchanged on Monday at $6.71-1/4 per bushel, an increase of nearly 2% since last Tuesday. The contract found support on Monday on the potential for impending renewable volume obligations from the U.S. Environmental Protection Agency to be bullish.

That particularly lifted CBOT soybean oil and soybeans, which rose 2% and 1.5%, respectively, on Monday. Most-active CBOT soybeans have not traded below $14 per bushel since Oct. 31. They ended at $14.57-1/4 on Monday.

Soybeans fell 2% through Nov. 22, and money managers reduced their soy net long by nearly 11,000 to 82,135 futures and options contracts. New shorts were slightly more influential than departing longs, and the new stance is significantly more bullish than a year ago but much less so than in late 2020.

CBOT soybean oil lost more than 4% through Nov. 22, and money managers axed around 10,000 contracts from their net long, which fell to 100,274 futures and options contracts. Soybean meal selling was just under 4,000 contracts, dropping the net long to 71,815. Karen Braun is a market analyst for Reuters. Views expressed above are her own.
Source: Reuters (Editing by Matthew Lewis)

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