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While it’s become a common theme for US grain markets that funds are purchasing corn, there are indications that this trend might be ending soon.
Money managers boosted their net long position in CBOT corn futures and options to 364,217 contracts during the week ending February 4, up from 350,721 contracts the previous week, according to data released today.
This is their most bullish corn outlook since April 2022, Reuters reported.
Net corn buyers
The only other time in the past four years that funds were net corn buyers for seven consecutive weeks was September 2022. However, the September streak involved notably fewer contracts.
The latest corn net long position held by money managers is below the 2010 record of 429,189 contracts.
However, the number of gross long positions is at a record high, slightly surpassing the 2010 high in late January, according to the report.
CBOT corn futures’ most active contract reached its highest price since October 2023 on February 5.
However, it declined 1.4% over the last three sessions, and the February 4 data may have signaled a potential top in the bullish corn momentum as short covering drove the week’s net buying for the first time in several weeks.
US corn-based ethanol production has recently reached record weekly highs, and export demand for American corn has remained strong, Reuters reported.
Additionally, a potential trade dispute with Mexico, the top buyer of US corn, has been suspended.
But, last week, Argentina’s dry crops received much-needed rainfall, and farmers in Mato Grosso, Brazil’s top corn-producing state, planted corn at a faster pace than usual, lessening previous delays.
Wheat outlook
The disparity between funds’ bullish corn and bearish wheat outlooks persists but did not deteriorate further last week.
Money managers reduced their net short position in CBOT wheat futures and options by over 20,000 contracts to 90,442 in the week ending February 4, according to the Reuters report.
CBOT wheat futures also climbed due to short covering, with the most-active contract rising almost 6% over the week and an additional 1% in the three sessions that followed, the report showed.
The contract reached its highest price since mid-October on Friday, closing at $5.92-1/2 per bushel.
Risky weather conditions in the Black Sea region pose a threat to wheat crops, and a significant decrease in Russian wheat exports is expected in the coming months. These factors have also captured the attention of traders.
Soybeans price increase
CBOT soybean’s most active contracts saw a price increase of nearly 3% for the week ending on February 4.
During this period, money managers reduced both long and short positions, resulting in a marginal increase of 533 contracts to their net long position, which ended the week at 57,029 futures and options contracts, Reuters reported.
On top of this, money managers slashed their net short position in CBOT soybean meal futures and options contracts from 52,291 to 33,460 in a week, coinciding with a 4% rise in CBOT soybean meal prices that week.
CBOT soybean oil futures and options net long positions reached an 11-week high of 42,215 contracts, as of February 4.
Money managers extended their net long position by about 2,500 contracts during the week.
This followed three weeks of heavy short covering after funds held a net short position of 31,999 contracts as of January 7. In the latest week, funds added both long and short positions.
Soybeans reached their highest price since late July on February 5, and CBOT soybean oil reached a three-month high on February 3. However, soybeans have dropped by over 2% in the last three sessions.
Cotton and live cattle
Money managers achieved a new record net short position in ICE No. 2 cotton futures and options by February 4, according to Reuters.
Additionally, they sold CME live cattle futures and options, reducing their record net-long position from the previous week.
Traders were waiting as of Friday to see if US President Donald Trump would impose reciprocal tariffs on countries that currently have tariffs on American goods, according to the report.
The US Department of Agriculture will release its monthly supply and demand reports on Tuesday.
Analysts expect the reports to show lower production numbers for Argentina and slightly higher numbers for Brazil. US demand will also be closely watched, Reuters said.
The post Why have hedge funds raised CBOT corn bets to a two-year high? appeared first on Invezz
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