Column: Funds retreat from massively bullish Chicago corn bets

FORT COLLINS, Colo. (Reuters) – Speculators last week began to turn the corner in their historic bullishness toward Chicago corn after futures hit multi-year highs on shrinking stockpiles, but they may have unloaded a lot more of the yellow grain on Friday as prices underwent a historic downward correction.

In the week ended Jan. 19, money managers reduced their net long position in CBOT corn futures and options to 349,495 contracts from 374,714 a week earlier, according to data from the U.S. Commodity Futures Trading Commission.

That was driven by the exit of 43,602 gross corn longs, the most for a single week since March 2018 and slightly topping the one ended March 17, 2020, when the coronavirus crisis first hit the markets. Funds also removed more than 18,000 gross shorts last week, the most for a week in four months. (tmsnrt.rs/2Y8QWx6)

Other reportable traders expanded their corn net long to a new record of 193,854 futures and options contracts through Jan. 19, an increase of about 11,000 contracts. Commercial hedgers bought a large chunk of corn for the third consecutive week, and index traders slightly extended length.

Most-active CBOT corn futures were up 1.7% in the week ended Jan. 19, which had only four trading days, though prices did not revisit their Jan. 13 top of $5.41-1/2 per bushel. Open interest for the week climbed 1% to 2.6 million contracts, the most since June 2019.

CBOT soybeans fell 2.3% through Jan. 19 after reaching their recent high of $14.36-1/2 per bushel on Jan. 13. Soybean open interest hit an all-time high as of Jan. 19 of 1.36 million contracts, up 1% on the week.

Money managers cut their net long in CBOT soybean futures and options to 151,898 contracts through Jan. 19 from 166,485 a week earlier. That marked funds’ eighth bean selling week of the last 10, and the latest stance is their least bullish since late August. (tmsnrt.rs/2MdIA4M)

After prices rose for several consecutive weeks, corn and soybean futures fell hard on Friday, especially since the weather has turned more favorable for previously parched crops in South America. Most-active corn fell 4.5% and soybeans dropped 4.3%, settling at $5.00-1/2 per bushel and $13.11-3/4 per bushel, respectively.

That was corn’s biggest daily percentage loss since Aug. 12, 2019, and for soybeans it was the largest since Aug. 10, 2018. Both of those days featured U.S. government reports, and the August ones are known to create some of the most volatile trading days of the year.

Commodity funds are estimated to have sold more than 40,000 corn and soybean futures contracts apiece over the last three sessions.

SOY PRODUCTS AND WHEAT

In the week ended Jan. 19, money managers cut their net long in CBOT soybean meal futures and options to 77,631 contracts from 84,408 contracts previously, and they trimmed their net long in soybean oil futures and options to 90,699 contracts from 93,536.

Those moves came with a 3.2% decline in most-active meal futures and a 2.2% fall in soybean oil.

Soybean oil futures fell on Friday but were up 1.4% over the last three sessions. Soybean meal got hammered along with corn and soybeans on Friday, falling 3.8%, the most-active contract’s largest daily percentage decline since March 19, 2018.

Chicago wheat futures joined the list of Friday casualties, as the 4% drop was the largest since Aug. 12, 2019. CBOT wheat fell 5.6% over the last three sessions, settling at $6.34-1/2 per bushel on Friday.

Traders are continuing to monitor the export situation out of top supplier Russia, which has announced plans to raise export taxes and maintain them through at least mid-year. But conditions for the 2021 Russian harvest have improved, and U.S. export business has been slower.

In the week ended Jan. 19, money managers boosted their net long in CBOT wheat futures and options to 20,618 contracts from 16,987 a week earlier on a 1% jump in futures. However, estimates peg fund selling at 30,500 futures contracts over the last three sessions. (tmsnrt.rs/3pbSfaz)

Money managers lifted their net long in Kansas City wheat futures and options by around 3,000 contracts through Jan. 19 to 58,093 contracts, the most bullish since August 2018. They also raised their Minneapolis wheat net long to 13,322 contracts from 11,797, and the new stance is funds’ most optimistic since July 2017.

K.C. and Minneapolis wheat futures fell hard on Friday, both dropping 4.8% over the last three sessions.

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