(The opinions expressed here are those of the author, a marketanalyst for Reuters.)
By Karen Braun
FORT COLLINS, Colo., Sept 22 (Reuters) - Speculators werenet sellers of Chicago-traded corn last week for the ninth weekin a row, though they drastically reduced bearishness insoybeans on U.S.-China trade hopes. That optimism souredsomewhat on Friday, but the ongoing trade talks and thefinishing of U.S. corn and soybean crops continue to be primaryfocal points in grain and oilseed markets.
In the week ended Sept. 17, hedge funds and other moneymanagers increased their net short position in CBOT corn futuresand options to 170,626 contracts from 136,399 a week prior,according to data from the U.S. Commodity Futures TradingCommission. (https://tmsnrt.rs/30bmSUp)
The period included the U.S. Department of Agriculture's cutto U.S. corn production, although the reduction was smaller thanexpected. Selling still dominated the week despite futuresrising 1.8% over the five-day span.
Investors' recent corn outlook is just about the mostbearish ever for the date, but trade sources estimate that fundswere light buyers of corn futures late last week.Warm September weather across the U.S. Corn Belt has been veryfavorable for late-planted crops, but many traders still seeoverall production shrinking.
December corn futures finished at $3.70-3/4 perbushel, which is comfortably the highest price for the date infour years.
Money managers slashed bearish bets in CBOT soybean futuresand options through Sept. 17 to 48,181 contracts from 91,737 aweek earlier. That was the most soybean contracts funds havebought in one week since December. (https://tmsnrt.rs/30BbGwu)
Traders were feeling friendlier toward soybeans after USDAcut U.S. production on Sept. 12, which was accompanied by alarger-than-expected reduction to year-end supply. But thebigger boost came from China’s 720,000-tonne purchase of U.S.soybeans leading up to the next round of trade talks between thetwo countries.
Deputy-level trade negotiations resumed face-to-face lastweek for the first time in almost two months, and this was aimedat paving the path for higher-level talks between U.S. andChinese officials next month. Agricultural tradewas a primary topic of last week’s talks, and the market wasoptimistic that progress was being made, especially consideringthe goodwill purchases.
But those hopes were dashed late in trading on Friday as itwas confirmed that Chinese officials cancelled visits to U.S.farms planned for this week. CBOT and CME futuresslumped on the news, and Wall Street's main indexes droppedsharply as a U.S.-China trade deal suddenly appeared fartherfrom reach.
Commodity funds were seen as net sellers of soybean futuresover the last three sessions.
SOY PRODUCTS AND WHEAT
In the week ended Sept. 17, money managers reversed theirstance in CBOT soybean oil futures and options, establishing anet long of 19,931 contracts versus a net short of 19,106 in theprevious week. The move was funds' second largest weeklypurchase of bean oil on record behind the week ended Aug. 13.
Brent crude oil, the international benchmark foroil, surged nearly 15% last Monday after an attack on SaudiArabian crude facilities, and this also boosted soybean oilfutures. Gains in oil are often linked toagricultural markets because crops are used to make ethanol andbiodiesel fuel.
CBOT oilshare, which measures soyoil's share ofvalue in the soy products, touched 0.34 last week, its highestin 20 months.
Investors have very different feelings about soybean meal,however, as they extended their net short through Sept. 17 to arecord 54,751 futures and options contracts from 47,606 a weekearlier. The previous record short was 54,430 contracts set inthe week ended June 27, 2017.
Soybean meal futures are at their lowest September levelssince 2010, with the December contract finishing at $295per short ton on Friday. U.S. soybean processors had theirbiggest August on record, crushing 168.085 million bushels ofthe oilseed, and that was the eighth month within the last yearwhere crush reached a new monthly high.
Trade estimates suggest commodity funds were net sellers ofsoybean meal futures over the last three sessions but flat inbean oil.
Global demand has been strong in the wheat market, butsupplies are also ample. Money managers trimmed their net shortin CBOT wheat futures and options to 12,577 contracts throughSept. 17 from 14,389 in the previous week. They are thought tohave been light sellers of CBOT wheat futures over the lastthree sessions. (https://tmsnrt.rs/30crObt)
Money managers also shaved their net short in Kansas Citywheat futures and options through Sept. 17 to 37,571 contractsfrom 41,566 in the previous week. Relative to the same date inprevious years, funds are particularly bearish toward K.C. wheatbut less so toward Chicago. (https://tmsnrt.rs/30wRtb3)
Funds pushed to yet another record short in Minneapoliswheat futures and options through Sept. 17, despite a light risein prices through the period. The net short of 23,071 contractsis up from 22,805 last week, and it is funds’ ninth new recordshort in spring wheat in the last 10 weeks.
December spring wheat futures rose 3.5% over thelast three sessions, the contract's largest three-day rise sinceMay. Excessive rains in the northern U.S. Plains and CanadianPrairies have hurt grain quality and slowed harvest pace.
(Editing by Daniel Wallis)