Funds top off bullish CBOT soy bets but tap brakes on corn -Braun

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FORT COLLINS — Speculators last week expanded soybean optimism to keep pace with their most bullish-ever views for the time of year, but they eased off their massive corn bets to a much larger degree than expected.

Money managers have increased their CBOT soybean net long position in 13 of the last 16 weeks. Crop estimates have taken a historic dive on drought in South America, especially in top exporter Brazil.

As of Feb. 8, the managed money soy net long reached 166,315 futures and options contracts, up about 12,000 on the week. Funds have added gross longs for eight consecutive weeks totaling nearly 100,000 contracts, the most for such a period since October 2020, the early days of the rally.

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CBOT soybean open interest surged 22% in the two weeks ended Feb. 8, the largest two-week gain since April 2016. At 1.08 million contracts, open interest is 18% below the year-ago levels, but it had been down 38% at the start of 2022.

Soybeans had another connection with 2016 later last week as a record number of CBOT soybean options were traded on Feb. 10, surpassing the high set on May 10, 2016. Thursday’s volume of 537,893 contracts was ninth all-time, the most since June 2018.

Three of the top five daily soybean volume records were set in April 2016.

Most-active CBOT soybean futures jumped to a nine-month high on Thursday of $16.33 per bushel but ended almost 59 cents lower, leaving traders feeling at least a short-term high had been reached. South American weather concerns lingered on Friday, and futures ended the last three sessions up nearly 1%.

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The U.S. Department of Agriculture flashed U.S. soybean sales every day last week, uncommon for the start of Brazil’s shipping season. The flashes totaled 1.62 million tonnes with 70% for next marketing year.

CBOT soybean meal futures rose more than 4% through Feb. 8, and money managers added more than 11,000 futures and options contracts to their net long, which reached 88,138 contracts. That is record-high for the date.

Soybean oil futures fell nearly 4% in that time frame, though fund selling was not as big as expected. Money managers shed about 7,700 futures and options contracts from their net long, dropping it to 72,782 contracts.

Soybean meal futures on Thursday hit $477.90 per short ton, the most-active contract’s highest level since June 2014, though they settled at $456.60 on Friday, up fractionally in the last three sessions. Soybean oil added back 4% between Wednesday and Friday.

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CORN AND WHEAT

In the week ended Feb. 8, money managers cut their net long in CBOT corn futures and options to 337,332 contracts from 372,551 a week earlier, according to the U.S. Commodity Futures Trading Commission.

That selling was almost four times larger than the market expected as most-active futures had fallen just fractionally during the period. Corn open interest rose 1% through Feb. 8 but is 35% below the same date last year, when it was almost at all-time highs.

Uncertainty over the Russia-Ukraine conflict threw a wrench into the final minutes of trading on Friday, sending corn, wheat and crude oil prices racing higher. The U.S. national security adviser said a Russian attack on Ukraine could begin any day and would likely start with an air assault.

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Tensions in the Black Sea – a key corn, wheat and sunflower oil exporting hub – have worried market participants that supply flow could be cut off. Ukrainian traders on Friday said exports have not yet been disrupted despite ongoing Russian naval exercises.

CBOT wheat futures rose 3.4% on Friday to a more than two-week high, ending at $7.97-3/4 per bushel. Corn was up 1.4% Friday and finished at $6.51 per bushel, a new high close for the move.

Commodity funds are predicted to have been modest buyers of all CBOT grain and oilseed futures between Wednesday and Friday. But the previous week’s predictions about wheat were incorrect as funds were light sellers, not buyers.

Money managers through Feb. 8 extended their net short in CBOT wheat futures and options by 3,100 to 29,552 contracts, their most pessimistic since July 2020. That was despite a 1.3% lift in futures.

Kansas City wheat futures and Minneapolis wheat rose a respective 2% and 3% through Feb. 8, but funds reduced net longs in both cases. Their K.C. net long dropped about 3,300 to 34,473 futures and options contracts, and they trimmed just 364 off their spring wheat net long, which fell to 3,596 contracts.

Karen Braun is a market analyst for Reuters. Views expressed above are her own.

(Editing by Matthew Lewis)