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Column: Funds buy CBOT corn for 13th straight week despite price skid

FORT COLLINS, Colo. (Reuters) - Chicago-traded corn futures fell last week over fears of rising global coronavirus cases, but speculators continued to buy the yellow grain as export demand remains strong. That optimism lingered late in the week with robust import possibilities in China.

Harvested corn kernels await inspection at Ag Plus Imc, a farmer-owned co-op, in Woodburn, Indiana, U.S., October 16, 2020. REUTERS/Bing Guan

In the week ended Nov. 3, money managers increased their net long position in CBOT corn to 290,080 futures and options contracts from 276,235 a week earlier, based on data published on Friday by the U.S. Commodity Futures Trading Commission.

That marked funds’ 13th consecutive week as net buyers of the yellow grain, the longest such streak since early 2014. Funds had been predicted to have sold 51,000 futures contracts during the period as most-active futures fell 3.6%.

New longs and short covering were both involved in the latest move, and the number of outright corn shorts dwindled to the fewest since November 2012.

Corn futures jumped 1.4% over the last three sessions, largely driven by strong U.S. export hopes. The U.S. Department of Agriculture’s Beijing office boosted China’s 2020-21 corn import outlook to 22 million tonnes from 7 million tonnes.

The United States through Oct. 29 had sold 10.8 million tonnes of corn for delivery to China in 2020-21. The harvest of Ukraine, a key corn supplier to China, fell short after a summer drought, which could increase U.S. business to the Asian country.

Trade sources predict that commodity funds bought 9,500 corn futures between Wednesday and Friday. The managed money corn net long has not risen above 300,000 contracts in more than eight years.

SOYBEANS AND WHEAT

Money managers reduced their net long in CBOT soybean futures and options to 210,957 contracts through Nov. 3 from 232,717 a week earlier. That coincided with a 1.1% decline in most-active futures and it was funds’ largest bean selling week since mid-July.

The latest move was mostly due to the reduction of outright longs. Funds’ adding of longs, not short covering, drove the surge in soy optimism during August and September.

Soybean futures broke $11 per bushel on Thursday for the first time in more than four years, and the most-active contract was up 3.5% over the last three sessions. Strong Chinese demand has been the market’s focus for several months, and concerns continue over dry weather in top exporter Brazil.

Commodity funds are pegged to have bought 27,500 soybean futures between Wednesday and Friday.

Through Nov. 3, money managers extended their net long in soybean meal by just 851 futures and options contracts to 85,130, but they cut their soyoil long to 89,051 contracts from 94,426 a week earlier.

Soy product futures rose between Wednesday and Friday, particularly in the case of soybean oil, and funds were likely net buyers of both. Soybean oil hit 35.79 cents per pound on Friday, the most-active contract’s highest level since Sept. 7, 2017.

Funds barely touched their CBOT wheat long through Nov. 3, trimming it by 291 futures and options contracts to 48,605. That remains funds’ most bullish Chicago wheat view for the time of year since 2012.

Global wheat demand has been healthy and traders continue to watch the dry conditions in top exporter Russia as well as in the southern U.S. Plains. Most-active wheat futures fell 1% over the last three sessions and funds were seen as light sellers.

Money managers boosted their net long in Kansas City wheat futures and options to 46,859 contracts through Nov. 3 from 41,410 in the prior week, and the new stance is their most bullish since Sept. 4, 2018.

But funds pulled back slightly on Minneapolis wheat, reducing their net long to 7,168 futures and options contracts from 8,877 a week earlier. Minneapolis futures rose 1% over the last three sessions, but K.C. wheat slid fractionally.

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

Editing by Matthew Lewis

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