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Funds retain strong CBOT corn, soy optimism on slimming supplies -Braun

Despite some volatile trading days, speculators have not largely altered their unusually bullish views in Chicago corn over the last month, though they had turned a little friendlier toward beans in the latest week.

Optimism faded in recent sessions, however, as the U.S. government projection of domestic corn supply was heavier than predicted. In the near term, investors are focused on the required record export pace, but next year’s supplies are also on the radar as the upcoming marketing year is just around the corner.

In the week ended Feb. 9, money managers increased their net long in CBOT corn futures and options to 358,807 contracts from 345,147 a week earlier, according to data from the U.S. Commodity Futures Trading Commission.

That was mainly the result of new gross longs. But funds reduced outright short positions for the eighth consecutive week, driving those to another eight-year low. Money managers hit their recent peak in corn bullishness on Jan. 12 with a net long of 374,714 futures and options contracts, and that position has oscillated over the last month.

Index traders bought corn through Feb. 9, but other reportable traders sold for a third consecutive week, dropping their net long to 155,515 contracts, which would have been a record prior to December. Open interest jumped another 2% on the week to within a half a percent of the June 2019 all-time high.

The U.S. Department of Agriculture on Feb. 9 did not reduce U.S. corn stockpiles nearly as much as the trade expected, generating a relatively heavy two-day selling streak in the market. Most-active corn futures fell 3.1% over the last three sessions, and commodity funds were seen selling 38,000 futures contracts.

With low U.S. corn and soybean supply projections, industry participants are eagerly awaiting farmers’ planting intentions for 2021. The average of new-crop futures during February will set the corn and soybean insurance guarantees for U.S. farmers, and those could have a large bearing on the planting decisions.

USDA on Friday will release unofficial supply and demand outlooks for the upcoming 2021-22 cycle, including a new stab at planted acreage. However, the first survey-based look at plantings will not be published until March 31.

SOYBEANS AND WHEAT

Money managers increased their net long in CBOT soybean futures and options to 171,770 contracts through Feb. 9 from 156,265 a week earlier. That was their largest bean buying week since September, largely the result of new longs.

USDA’s tweaks to soybean supply and demand aligned with expectations, though the agency did not reduce South American crops. On Thursday, the Buenos Aires grains exchange boosted Argentina’s corn and soy harvests based on improved weather. Brazil’s Conab did the same on Thursday, making a notable upward revision to the heavily exported second corn crop.

Still, strong global demand for the oilseed has limited selling interest. U.S. soybean processors are expected to have crushed record volumes last month, a fifth consecutive monthly record. But most-active futures Sv1 dropped 2.1% between Wednesday and Friday, and funds may have lightened bullish bets.

Money managers slightly extended their net long in soybean meal futures and options to 69,625 contracts through Feb. 9 from 67,511 a in the prior week. They also lifted their net long in soybean oil futures and options to 110,392 contracts from 105,930.

Soy product futures fell over the last three sessions, meal to a larger degree. But most-active soybean oil BOv1 on Feb. 9 hit a near eight-year high of 46.67 cents per pound, rallying along with other global vegetable oils.

Speculators have barely changed their stance on Chicago wheat futures and options over the last month. Through Feb. 9, they trimmed their net long by 578 contracts to 19,306.

Their Kansas City wheat views have also been relatively steady so far this calendar year, though far more optimistic than usual for the time of year. Money managers increased their net long to 60,092 futures and options contracts from 56,401 a week earlier.

But they reduced their net long in Minneapolis wheat futures and options by a hefty 1,167 contracts to 12,933 after spring wheat bullishness reached a near four-year high two weeks earlier.

Wheat traders are expecting generally sufficient global supplies in the upcoming year, though a cold blast expected in the United States over the next few days could potentially cause damage to dormant wheat crops. Still, Chicago wheat futures Wv1 fell 2% between Wednesday and Friday.
Source: Reuters (Editing by Matthew Lewis)

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