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

NAPERVILLE, Illinois  - Speculators held on to their bullish Chicago corn bets in the days leading up to last Wednesday's U.S. tariff reveal.

However, they still notched their sixth consecutive week as net sellers of the yellow grain as geopolitical uncertainties outweigh friendly fundamentals.

In the week ended April 1, money managers reduced their net long position in CBOT corn futures and options to 56,757 contracts, a 21-week low. That compared with 74,607 a week earlier, the move stemming entirely from exiting longs.

Most-active CBOT corn futures drifted 1% higher that week, probably because traders were removing risks ahead of Wednesday, what U.S. President Donald Trump called "Liberation Day."

Money managers were also net sellers of CBOT wheat and soybean meal during the week ended April 1, with fresh short bets as the driver. This resulted in a record net short in CBOT soybean meal futures and options of 100,733 contracts, up from the previous week's 84,050.

Funds pushed their net short in CBOT wheat futures and options to a 16-month high of 112,040 contracts versus 92,587 in the prior week. Both meal and wheat futures had eased less than 1% during the week.

Potential movement on the U.S. biofuel policy sent CBOT soybean oil futures surging more than 12% in the week ended April 1. Soybeans were pulled along for the ride, adding 3.2%.

Money managers nearly erased their heavy net short in CBOT soybean oil futures and options with one of their largest-ever weeks of net buying, driven heavily by short covering. The net short fell to 5,762 contracts from 44,618 a week earlier.

Short covering also caused a reduction in funds' net short in CBOT soybeans, which fell to 29,847 futures and options contracts from 42,959 in the previous week. One year ago, funds' bean net short was close to 140,000 contracts.

TARIFFS HIT

On Wednesday, Washington imposed sweeping tariffs on all trade partners, weighing heavily on financial and commodity markets. Over the last three sessions, CBOT soybeans fell 5.5%. On Friday they hit their lowest price since December after China raised tariffs on U.S. goods, including the oilseed.

Soymeal and soyoil fell more than 3% and wheat eased 2%. Corn futures featured the smallest movement, slipping just 0.3% between Wednesday and Friday.

Wednesday's tariffs were more severe than anticipated. Since then, S&P 500 companies wiped out $5 trillion in value and the Nasdaq has confirmed a bear market.

Framed as "reciprocal" tariffs, Trump's levies were calculated as the rates necessary to balance bilateral trade deficits between the U.S. and its trade partners, essentially leading to much steeper-than-expected rates against most countries.

The top U.S. agricultural trade partners, Canada and Mexico, were excluded from the latest round of tariffs, and many goods remain exempt for now under the latest North American trade pact.

But concerns have heightened for key U.S. agricultural export destinations like Europe and Asian countries apart from China, such as Taiwan and Vietnam. Japan and South Korea were the No. 4 and No. 5 destinations for U.S. farm goods last year.

The U.S. tariffs will continue to steal the market’s attention for the foreseeable future. However, the U.S. Department of Agriculture on Thursday will release its monthly supply and demand forecasts, which could offer traders and analysts a small reprieve from the trade drama. Karen Braun is a market analyst for Reuters. Views expressed above are her own.

(Written by Karen Braun; Editing by Richard Chang)


Reuters