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Funds lower risk in CBOT corn, soy ahead of pivotal U.S. data

Speculators backed off Chicago corn and soybean futures last week ahead of the U.S. government’s annual data blitz, which stood to threaten investors’ long-standing bullish views given the historically high prices.

In the week ended Jan. 10, money managers reduced their net long position in CBOT corn futures and options to 149,605 contracts from 196,457 a week earlier. Funds removed longs and added shorts, but the former was more prominent.

Most-active CBOT corn futures had declined more than 2% through Jan. 10, and CBOT soybeans fell fractionally. Still, funds’ soybean selling hit a three-month high during that week.

Money managers through Jan. 10 reduced their net long in CBOT soybean futures and options to 131,704 contracts from 142,994 a week earlier, their first selling week since early December. This was primarily motivated by exiting longs, the first such instance in seven weeks.

The managed money soybean meal net long hit another record through Jan. 10 of 142,711 futures and options contracts, up less than 1,000 on the week. Soymeal futures on Friday touched $485.30 per short ton, their highest level since late March and highest ever during January.

Most-active CBOT soybean oil fell 1% through Jan. 10, and money managers reduced their net long by more than 9,100 futures and options contracts to 54,614, even with a year ago. That pushed funds’ net short in the CBOT oilshare, which measures soyoil’s share of value in the soy products, to the highest level since 2018.

Corn and soybean futures’ elevated status make them more vulnerable to downside corrections amid bearish or even neutral news. Luckily for the bulls, the U.S. Department of Agriculture’s outlooks on Thursday did not disrupt the plans.

The U.S. corn and soybean crops both came in below the range of trade guesses, helping Dec. 1 stocks to also come in lighter, and U.S. balance sheets tightened against predictions. The trade’s pre-report estimates on U.S. corn acres and soybean yield were especially off the mark.

USDA also reduced Argentina’s crops as expected and soybeans by even more, though the agency’s numbers may still be far too high based on outlooks out of Argentine exchanges, which were slashed significantly last week.

Corn and soybean futures both rose about 3% from Wednesday through Friday. On Friday, soybeans settled at $15.27-3/4 per bushel, their highest finish since June, and corn notched its highest settle of the year so far at $6.75.

WHEAT

The week ended Jan. 10 is the first since the one ended Aug. 18, 2020, where money managers were net short across all three wheat contracts as they finally flipped to a bearish stance in Kansas City wheat.

Most-active CBOT wheat futures shed nearly 6% in the week ended Jan. 10 after demand and other economic concerns plagued commodities in the opening sessions of 2023. That included a 15-month low of $7.20-1/2 per bushel on Jan. 10.

During that week, money managers extended their net short in CBOT wheat to 63,134 futures and options contracts, up more than 10,000 from the prior week.

Traders expected to see strong U.S. winter wheat plantings on Thursday, but they still severely underestimated 2023 area, which landed at an eight-year high near 37 million acres. However, strength in corn and soy, along with much lighter-than-predicted Dec. 1 U.S. wheat stocks, allowed CBOT wheat to rise 1.6% in the last three sessions.

Money managers established a net short of 8,023 futures and options contracts in K.C. wheat, their first bearish view since August 2020. Weekly selling hit nearly 10,000 contracts.

The managed money net short in Minneapolis wheat futures and options decreased slightly through Jan. 10 to 2,704 contracts. Funds have been bearish spring wheat since late November.

Most-active K.C. futures on Jan. 11 hit an 11-month low near $8 per bushel but added back nearly 4% through Friday. March Minneapolis wheat on Wednesday touched a five-month low of $8.90 before bouncing 2% to end the week. Karen Braun is a market analyst for Reuters. Views expressed above are her own.
Source: Reuters (Writing by Karen Braun Editing by Matthew Lewis)

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