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Funds open 2022 with less CBOT optimism than last year -Braun

Speculators have begun 2022 on an unusually enthusiastic note across Chicago-traded grains and oilseeds, though they were even more bullish a year ago at this time. Futures remain safely above the year-ago levels except for in soybeans and soybean meal.

Open interest for corn, soybeans and wheat is considerably lower than last year, and commodity funds are now pessimistic toward CBOT wheat, opposite their early 2021 views.

Soy complex and corn prices are up so far on the year due to escalating drought conditions for South American crops, but all three wheat contracts are lower.

In the week ended Jan. 4, money managers reduced their net long position in CBOT corn futures and options to 365,905 contracts from 373,345 a week earlier. That is very close to the year-ago levels, though open interest is 22% lower than at the same point last year.

Data published Friday by the U.S. Commodity Futures Trading Commission also showed that money managers increased their net long in CBOT soybean futures and options by less than 1,000 contracts through Jan. 4 to 98,919 contracts. That compares with about 176,000 a year ago.

Soybean open interest as of Jan. 4 was 38% lower than last year, when open interest was abnormally strong for both soybeans and corn. Those levels are closer to average today for corn but perhaps a bit less than average for soybeans.

Money managers extended their net long in CBOT soybean meal futures and options for a fourth consecutive week through Jan. 4. That position reached 70,768 contracts, up from 61,162 a week earlier, and it is funds’ most bullish meal stance in nearly a year.

Soymeal futures hit new highs in all contract months on Friday, including $431.80 per short ton in the most-active March contract SMH2. Meal futures jumped 2.5% over the last three sessions largely on drought in top exporter Argentina, which may face record high temperatures this week.

The drought in southern Brazil and Argentina also sent most-active soybean futures Sv1 to their highest point since July 19. The contract ended at $14.10-1/4 per bushel on Friday, up 1.5% over the recent three sessions.

Corn futures have been caught between strength in the soy complex and weakness in wheat, and the most-active contract Cv1 dropped fractionally in the last three sessions. Corn settled at $6.06-3/4 per bushel on Friday, up about 22% versus a year ago.

Money managers through Jan. 4 increased their net long position in CBOT soybean oil futures and options to 53,188 contracts from 45,394 in the previous week on a 2.9% gain in futures. Soyoil futures BOv1 added 0.8% between Wednesday and Friday, but the vegoil in the last couple months has lost significant strength versus soybean meal.

Money managers sold CBOT wheat futures and options for a sixth consecutive week through Jan. 4, expanding their net short to 19,845 contracts from 11,773 a week earlier. Wheat open interest is 16% below last year’s levels and the lightest for the date since 2010.

Most-active CBOT wheat futures Wv1 on Friday dropped to the lowest levels since October but finished more than 3% off those lows. The contract ended Friday at $7.58-1/2 per bushel, nearly 8% off last month’s high set on Dec. 27.

Winter wheat health in top U.S. states plunged over the last month, but crops in the Southern Hemisphere have had success, easing global supply concerns for now. Paris wheat futures BL2c1 last week were down 12% from the all-time high in November.

Analysts predict that U.S. farmers planted 34.26 million acres of winter wheat for this year’s harvest, up less than 2% on the year. But U.S. wheat remains uncompetitive on the export market, and sales in the latest week reached a marketing-year low.

March Kansas City wheat futures KWH2 on Friday reached the lowest levels since Oct. 21 and Minneapolis wheat MWEH2 the lowest since Oct. 1. Those contracts fell 3.6% and 4.9%, respectively, in the last three sessions.

Through Jan. 4, money managers staged their biggest K.C. wheat selling week since March, reducing their net long to 51,813 futures and options contracts from 59,406 a week earlier. The new stance is a couple thousand contracts smaller than a year ago.

Funds slashed their Minneapolis wheat net long to 9,481 futures and options contracts from 12,030 a week earlier. That marks their least bullish view since July, though it is more optimistic than a year ago.

Karen Braun is a market analyst for Reuters. Views expressed above are her own.
Source: Reuters (Editing by Diane Craft;)

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