28.06.2021 (www.nasdaq.com) - By Karen Braun

FORT COLLINS, Colo., June 27 (Reuters) - The prospect for bigger U.S. crops and uncertainty over demand have made speculators rethink their heavily bullish bets in Chicago corn and soybeans, but investors are still hesitant to bet against either one.

In the week ended June 22, money managers reduced their net long in CBOT corn futures and options to 243,465 contracts from 252,730 a week earlier, based on data from the U.S. Commodity Futures Trading Commission.

The new stance is funds’ least bullish corn view since October, but estimates had assumed selling would be more than three times heavier since December corn futures CZ1 plunged 6% during the week. (https://tmsnrt.rs/3dkncFI)

Money managers’ outright corn shorts numbered 29,800 contracts as of June 22, slightly below the recent 10-week average and suggestive of market uncertainty. However, their outright longs have reached an eight-month low and are down by more than a third in the last 10 weeks.

In the three weeks ended June 22, December corn fell 6.6% and money managers cut their net long by 16%. November soybeans SX1 have fallen 6.8% during that period, but money managers have slashed their bullish bets by 42%.

Funds’ soybean selloff in the latest two weeks was the largest such move since early 2020. Through June 22, money managers cut their net long in soybean futures and options to 80,304 contracts from 107,492 in the prior week, and the new stance is their least optimistic since August. (https://tmsnrt.rs/3A10xIe)

But as in corn, speculators are not super eager to place big short bets on soybeans. Their outright shorts numbered 13,672 contracts as of June 22, a bit above the 10-week average but not materially different from most other weeks so far in 2021. Gross longs have dropped 41% in the last 10 weeks.

Traders have been anticipating the upcoming U.S. acreage and stocks data due on Wednesday from the Department of Agriculture. These reports have historically caused the most volatile price reaction versus any other USDA reports published during the year.

Analysts see a relatively huge increase in combined corn and soybean plantings from the March survey, likely based on the historic spring rally. But the expectation for more acres was not the only thing weighing on futures last week.

New-crop corn fell 3.7% in the last three sessions while new-crop soybeans dropped 2.5%. Weather improved for parched U.S. crops and demand concerns were reinforced on Friday as the U.S. Supreme Court ruled that small oil refineries could win exemptions from biofuel laws.

SOYBEAN PRODUCTS AND WHEAT

The Biden administration has yet to confirm the refinery exemptions, but the possibility also hit soybean oil hard, resulting in limit-down moves. However, December soybean oil futures BOZ1 are still at 13-year highs for the date and double the year-ago levels.

The contract fell more than 5% in the week ended June 22 and money managers reduced their soyoil net long by more than 15,000 futures and options contracts to 52,152, their least optimistic since early August.

December soybean meal futures SMZ1 have fallen more than 17% since their May 12 contract high and they were off more than 3% in the week ended June 22. However, money managers added just over 1,000 futures and options contracts to their net long during the period, bumping the position to 20,132 contracts.

The U.S. spring wheat crop is in nearly the worst shape ever amid drought conditions, but money managers made a significant reduction in their Minneapolis wheat net long through June 22 to 10,867 futures and options contracts from 15,298 a week earlier. The September contract MWEU1 rose nearly 4% during the period and jumped another 3% in the last three sessions.

CBOT September wheat WU1 fell nearly 2% through June 22, but against expectations, money managers flipped back to a net long of 3,015 futures and options contracts, an increase of more than 11,000 on the week. Funds reduced their net long in Kansas City wheat futures and options to 14,852 contracts from 17,487.

Graphic- Managed money net position in CBOT corn futures and optionshttps://tmsnrt.rs/3dkncFI

Graphic- Managed money net position in CBOT soybean futures and optionshttps://tmsnrt.rs/3A10xIe

(Editing by Matthew Lewis)

((karen.braun@thomsonreuters.com; Twitter: @kannbwx))