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Column: Funds’ bullish view in CBOT soybeans approaching 2012 record

FORT COLLINS, Colo. (Reuters) - Speculators have likely placed record bullish bets for the time of year on Chicago-traded soybeans amid the historic rally in futures, and those bets may be within striking distance of the all-time high set more than eight years ago.

Soybeans are harvested from a field on Hodgen Farm in Roachdale, Indiana, U.S. November 8, 2019. REUTERS/Bryan Woolston

In the week ended Sept. 15, money managers boosted their net long position in CBOT soybean futures and options to 191,774 contracts from 173,907 a week earlier, according to data published Friday by the U.S. Commodity Futures Trading Commission.

New longs, rather than short covering, continued to drive the bullish view higher last week. In the five weeks ended Sept. 15, funds added some 120,615 gross soybean longs, the second most for such a period after the one ended March 13, 2018.

Investors removed some 44,295 gross shorts in those five weeks, though the majority occurred during the first week. As of Sept. 15, outright soybean shorts stood at 16,124 contracts, the fewest since May 1, 2018.

Soybean futures ripped more than 5% higher between Wednesday and Friday, reaching the highest level for the most-active contract since May 29, 2018. Futures settled at $10.43-1/2 per bushel on Friday, the highest for the date since 2013.

Trade sources place the Wednesday-Friday fund buying in soybean futures at 50,500 contracts. That would rank the net long at Friday’s close behind just seven weeks in mid-2012 and less than 12,000 contracts from the all-time high of 253,889 set in the week ended May 1, 2012.

China continues to make large purchases of U.S. soybeans almost daily, which has been a primary factor in the recent rally. The U.S. Department of Agriculture through its daily reporting system confirmed at least 984,000 tonnes of U.S. beans sold to the Asian buyer last week, with another 810,500 tonnes booked by unknown buyers.

The soy products have also followed the upward march. Most-active soybean meal futures on Friday hit their highest mark since June 15, 2018, and soybean oil reached its highest level since Jan. 2.

Through Sept. 15, money managers boosted their net long in soybean meal futures and options to 43,697 contracts from 32,119 in the prior week. Trade estimates place fund buying over the last three sessions at 21,500 contracts, which would make the net long the biggest for the date since 2010.

In soybean oil, money managers’ net long jumped to 94,564 futures and options contracts through Sept. 15 from 85,299 a week earlier, and the predicted buying at the end of last week would place funds’ bullish stance at a new high for the date.

GRAINS

Through Sept. 15, money managers extended their net long in CBOT corn futures and options to 58,556 contracts from 33,494 a week before. Unlike in soybeans, short covering has driven funds’ increasing corn bullishness and has been responsible for 90% of the move in the latest five weeks.

USDA on Friday confirmed another U.S. corn deal to China, and the total sales to China easily top volumes from any previous year. Corn futures rose 3.4% over the last three sessions, reaching the highest mark on Friday since March 10. Futures are now the most elevated for the time of year since 2015.

Trade sources peg fund buying in corn futures over the last three sessions at 42,500 contracts, which would push the net long just over 100,000 contracts by Friday’s close. That would be investors’ most optimistic corn stance for the time of year since 2012.

Wheat has also been a rally participant as unfavorable weather has crept into some of the key suppliers and global export prices have risen. Most-active CBOT wheat futures on Friday hit their highest mark since March 30, jumping more than 6% on Thursday and Friday alone.

Money managers reduced their net long in CBOT wheat futures and options through Sept. 15 to 15,112 contracts from 23,175 a week earlier. However, trade sources place Wednesday-Friday fund buying at 30,000 futures contracts, which would boost the wheat long to the most bullish for the date since 2012.

In Kansas City wheat futures and options, funds increased their net long to 10,192 contracts through Sept. 15 from 8,923 a week prior. They also cut their net short in Minneapolis wheat futures and options to 3,008 contracts from 4,921, and the new stance is their least bearish since April 2, 2019.

The opinions expressed here are those of the author, a market analyst for Reuters.

Editing by Daniel Wallis

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