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Funds pile in to CBOT soyoil and stage biggest post-war wheat sell-off

Despite tight global wheat stocks, record prices and historic uncertainty over trade, speculators have spent more time this year selling Chicago wheat futures and options rather than buying them, though moves have been light as open interest is at 17-year lows for the date.

But in the week ended Oct. 25, money managers boosted their net short position in CBOT wheat futures and options by 14,000 to 36,052 contracts, their largest single-week sell-off since July 2021.

Funds now hold their most bearish CBOT wheat stance since June 2020, perhaps an uncomfortable position given that Russia on Saturday halted its role in the Ukraine export deal, cutting off Ukraine’s agricultural shipments and blocking at least 218 vessels from eventual departure.

Money managers’ latest wheat move was primarily due to the addition of new shorts, easily the most for any week since the Russian invasion of Ukraine in late February. Such a sell-off was not anticipated as most-active CBOT wheat futures Wv1 fell a modest 1.7% through Oct. 25.

Wheat futures on Friday touched more than one-month lows, settling at $8.29-1/4 per bushel, almost 13% off the October high and similar to the prices seen in the days before the invasion. The trade had been feeling more optimistic toward the Ukraine deal in recent weeks, at least prior to Saturday.

Funds’ bearish CBOT wheat views are not all that standout for the time of year, maybe a little more negative than average, though they are far more modest than in 2016 or 2017, when money managers entered November with a net short of over 100,000 contracts.

Sufficient uncertainties and low market participation should prevent funds’ bearish views from approaching these levels. Open interest was very high in those years, especially in 2017. Wheat futures in 2016 and 2017 were at the lowest levels observed in the last decade-plus.

In CBOT corn, money managers’ net long, up more than 10,000 contracts in the week ended Oct. 25, is very similar to the same week in the previous two years at 264,374 futures and options contracts.

Most-active corn futures Cv1 drifted fractionally lower on Friday, ending at $6.80-3/4 per bushel. Concerns for slow U.S. corn demand, particularly for exports, have been balanced by the tighter global supply picture and the unknown future of Ukraine’s exports.

SOYBEANS AND PRODUCTS
CBOT soybean oil futures BOv1 surged 5% for a second straight week in the week ended Oct. 25, and money managers added more than 20,000 gross longs to their net long, which reached 95,161 futures and options contracts.

That was up from 60,984 contracts two weeks earlier, and the latest two-week stretch of buying is funds’ largest in the vegoil since the first week of October 2021. The net long is now the biggest since April.

CBOT soyoil has rallied this month along with other global vegoil markets on supply concerns and strength in crude oil. Soyoil on Thursday hit a four-month high of 73.97 cents per pound, though the contract settled almost 3% off that high on Friday.

Data from the U.S. Commodity Futures Trading Commission showed that money managers through Oct. 25 added more than 15,000 soybean meal futures and options contracts to their net long, which jumped to 86,030 contracts.

October had begun with sharp selling in CBOT soymeal, though the latest week of buying was funds’ biggest since November 2021. The latest move resulted largely from new longs, but short covering hit a 20-week high.

Soymeal futures SMv1 rose more than 3% in the week ended Oct. 25 and added more than 2% over the last three sessions, reaching a one-month high on Friday and settling at $425.40 per short ton. That is 28% higher than the same date a year ago.

CBOT soybeans came along for the ride last week as fractional gains in futures corresponded with moderate fund buying. Money managers increased their net long to 75,411 futures and options contracts through Oct. 25 from 66,862 a week earlier.

Strength in soymeal and outside markets on Friday lifted CBOT January soybeans SF3 slightly to end the week, settling at $14.00-1/4 per bushel.
Source: Reuters (Writing by Karen Braun Editing by Matthew Lewis)

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