Saturday, May 21

Funds trim exposure in CBOT grains but remain acutely bullish -Braun


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NAPERVILLE — Speculators eased their record bullish bets in Chicago grains and oilseeds last week, though corn and soybean oil futures went on to new highs in the following days and other contracts maintained their sharp yearly gains.

Although net selling was the latest theme among commodity funds, it was based predominantly on the reduction of longs and not new shorts. That indicates investors remain highly uncertain about forward price trends while also acknowledging continued threats to global supplies.

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Most-actively traded CBOT corn futures rose fractionally in the week ended April 26, though soybeans declined 2.6%, wheat shed 1.3% and soybean meal lost nearly 5%. Soybean oil was the only winner in that period, gaining more than 5% and reaching lifetime highs.

The loss of exports out of Ukraine, particularly for corn and sunflower oil, has been dominating the markets for two months now, though more supply risks arose last week.

Top vegetable oil exporter Indonesia cut off palm oil shipments on Wednesday in hopes of curbing domestic prices, though an industry body said on Thursday the ban may be needed only for a few weeks.

On Tuesday, top canola and canola oil exporter Canada said its farmers would plant fewer acres of the oilseed than expected, adding to the vegoil pressure. Strong demand for US soybeans has also added support.

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US corn planting pace as of a week ago was the slowest in nine years, and cold, wet weather last week may have limited efforts. Temperatures are expected to remain cooler than average across much of the Corn Belt through mid-May.

April was historically dry for Brazil’s top corn state of Mato Grosso, and forecasts continue to be stingy on rain. This could reduce Brazil’s exportable corn just months after an unusually large volume of soybeans was lost to drought.

US winter wheat a week ago was in the worst shape since 1996, though some late-week rains and the potential for more moisture through mid-week pressured wheat futures on Friday. Canadian farmers are planning for more wheat acres than analysts predicted.

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NET SELLERS

Money managers through April 26 reduced their net long position in CBOT corn futures and options by more than 18,000 to 360,655 contracts, according to data from the US Commodity Futures Trading Commission.

They also cut more than 6,000 contracts from their net long in CBOT soybeans, which fell to 173,477 futures and options contracts as of April 26. That was the first time in four weeks that funds had sold corn or beans.

Money managers’ soybean meal net long dropped to a two-month low of 91,291 futures and options contracts versus 99,542 a week earlier, though their soybean oil long inched up nearly 1,600 contracts to 97,683.

Through April 26, money managers were sellers across the wheat market, cutting their Minneapolis wheat net long to 18,268 futures and options contracts from what was an all-time high of 19,867 the week before.

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Funds staged their largest selling week in Kansas City wheat since January, having reduced their net long by more than 4,400 to 45,407 futures and options contracts. That is tied with 2011 for the most bullish for the date.

Selling in Chicago wheat was negligible through April 26 as money managers removed just 290 contracts from their net long, which dropped to 14,180 futures and options contracts.

FRIDAY

The last trading day of April marked some notable milestones across global agricultural futures markets. Most-active CBOT corn reached $8.24-1/2 per bushel, its highest level since August 2012. There are only six other sessions where the contract has ever traded higher , all in August 2012.

December corn reached a contract high of $7.57 per bushel, and November soybeans came within 15 cents of its Feb. 24 high. Chinese corn futures hit all-time highs on Friday.

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CBOT wheat futures hit three-week lows on US rains, settling on Friday at $10.55-3/4 per bushel. However, new-crop September Minneapolis spring wheat futures on Thursday set a contract high of $11.91-1/4 per bushel.

Benchmark Malaysian palm oil futures on Friday notched a new all-time high close of 7,105 ringgit a tonne, capping off the biggest monthly gains in 13 years. CBOT soybean oil hit another lifetime high on Friday of 87.65 cents per pound.

ICE canola futures had hit all-time highs earlier last week, and Paris rapeseed achieved them the week before. Karen Braun is a market analyst for Reuters. Views expressed above are her own.

(Editing by Matthew Lewis)

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