FORT COLLINS, Colo. - Speculators and investors have kicked off the new year with record bullish views in Chicago-traded corn, as global stockpiles are set to shrink. Within the past week, CBOT corn, soybean and wheat futures have all notched prices not seen since 2014.

Combined across CBOT corn, wheat, soybeans and soy products, and including Kansas City and Minneapolis wheat, speculators' total gross longs have hit a record 987,624 futures and options contracts. Prior to 2020, the high was 929,323 contracts in August 2012.

In the week ended Jan. 5, money managers increased their net long position in CBOT corn futures and options to 349,888 contracts from 332,045 a week earlier, according to data from the U.S. Commodity Futures Trading Commission.  

That remains below the all-time managed money high of 429,189 contracts set in September 2010. But when adding in other reportable traders, the combined net long surges to a record 520,642 futures and options contracts.  

Commodity index traders have also placed record-large bets on corn, contributing to the market momentum.  

Most-active corn futures surged 7.7% in the week ended Jan. 5, and they broke through $5 per bushel the following day for the first time since May 2014. They rose nearly 1% over the last three sessions, and commodity funds are expected to have extended their futures buying streak.  

Corn and soybean trade has recently been driven by both increasing money flow into the grain markets and the expectation for supplies to tighten significantly versus recent years. That has been supported by ongoing dry conditions in Argentina, the top exporter of soybean products and No. 3 in corn.

Parts of Brazil have also been dry, and analysts generally expect that the South American crops will be smaller than originally expected, and potentially much smaller in the case of Argentina. Rainfall forecasts heading into the weekend were still mixed for Argentina, adding to the uncertainty.

Traders are awaiting Tuesday's reports from the U.S. Department of Agriculture, which will address South American production as well as 2020 U.S. corn and soybean production and U.S. grain stocks, among other items. Analysts see the U.S. crops shrinking slightly from previous estimates, and they also expect ending stocks to fall. 

SOYBEANS AND WHEAT

Most-active soybeans jumped 7% in the week ended Jan. 5, but money managers were net sellers, reducing their net long to 175,827 futures and options contracts from 196,487 a week earlier. That marks funds' least bullish view since early September.

The move was entirely driven by the reduction of longs, and it went against market expectations that funds had bought 55,000 soybean futures during the period.

Combining the managed money soybean position with that of other reportable traders, the net long is still close to the historical maximum, but it has been trending downward since the October record. 

Soybean futures hit another top on Friday with the most-active contract Sv1 touching $13.86 per bushel, the highest since June 2014. The contract rose 2% over the last three sessions, and commodity funds were seen buying 15,500 futures.

Money managers trimmed their net long in soybean oil futures and options by just 72 contracts through Jan. 5 to 112,917, and they reduced their net long in soybean meal by just under 5,000 contracts to 84,594 futures and options contracts.

Chicago wheat rallied 6.5% in the week ended Jan. 5, and money managers increased their net long to 25,210 futures and options contracts from 13,360 a week earlier.

CBOT wheat futures Wv1 last Tuesday hit $6.64-1/2 per bushel, the highest since December 2014, but they fell more than 2% over the last three sessions as traders took profits. Analysts believe that USDA this week will reveal that U.S. farmers planted more winter wheat acres than a year ago.

Kansas City wheat KWv1 also fell more than 2% over the last three sessions, but Minneapolis wheat futures were up fractionally following a bounce on Friday.

Through Jan. 5, money managers shaved their net long in K.C. wheat futures and options to 54,457 contracts from 55,560 a week earlier. But funds' bullish Minneapolis bet surged to 7,748 futures and options contracts from 3,933 a week prior, and that was predominantly on new longs.

 

(Editing by Richard Pullin) ((karen.braun@thomsonreuters.com; Reuters Messaging: karen.braun.thomsonreuters.net@reuters.com; Twitter: @kannbwx))