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

NAPERVILLE, Illinois - Speculators last week bailed on short positions in Chicago grains and oilseeds for a second consecutive week as U.S. crops are finishing under a dry spell and drought is spreading throughout Brazil’s farmlands.

Investors are still solidly bearish across corn, soybean and wheat markets, but their corn views are no longer historic.

In the week ended Sept. 10, money managers cut their net short position in CBOT corn futures and options to 132,134 contracts from 176,211 a week earlier. Most of that move stemmed from short covering, but funds added gross longs for a third consecutive week.

From late June to early September, funds’ net corn short was the largest ever for the time of year. Last week’s reduction brought the position nearly even with the same dates in 2023 and 2019, though at this point in those years, investors had just come off the long side and were adding shorts.

Money managers’ net short in CBOT soybeans is still the largest ever for the time of year, but they reduced the position through Sept. 10 to 130,601 futures and options contracts from 154,096 in the prior week.

That was due to short covering and a slight reduction in gross longs, suggesting no bullish undertones to funds’ latest soybean move.

Last week’s short covering in both corn and soybeans came despite modest declines in CBOT futures. Prices rebounded over the last three sessions, even as the U.S. Department of Agriculture confirmed its outlooks for massive U.S. corn and soybean yields.

Traders may be thinking that the U.S. corn and soy harvest pegs could move lower from here given the exceptionally dry weather observed over the last several weeks.

Eyes have also moved to Brazil’s top soybean and corn states, where soil moisture has dropped to the lowest levels in 30 years, likely delaying planting. Brazil, the world’s top soybean exporter, has been slated to raise a record crop in the upcoming season.

CBOT December corn futures on Friday jumped nearly 2% to settle at $4.13-1/4 per bushel, the contract’s highest finish in seven weeks. November soybeans closed Friday at $10.06-1/4 per bushel, slightly below the month’s average so far.

CBOT December wheat has surged nearly 8% over the last two weeks, topping out at $5.98-3/4 per bushel on Friday. That marked a 12-week high for the most-active contract.

Dry weather in Ukraine and Russia may hamper winter wheat sowing and export tensions have flared up again between the two major suppliers.

A Ukrainian grain vessel was hit by a Russian missile last week, according to Ukraine - the first missile strike on a civilian vessel transporting grains since the start of Moscow's invasion in February 2022.

In the week ended Sept. 10, money managers cut their net short in CBOT wheat futures and options to a 15-week low of 29,397 contracts from 42,624 a week earlier.

Funds’ wheat position is no longer unusually bearish for the date and is only about a third as large as their year-ago net short. Wheat futures late last week were nearly identical to those from the same week in 2023.

On Monday, traders will be monitoring U.S. soybean and corn harvest progress as well as monthly U.S. soybean processing data, which is expected to show a record-large August volume.

Weather forecasts for key regions of Brazil, Russia and Ukraine late last week showed dryness persisting throughout most of the next two weeks, and traders will be watching for any change in these outlooks that could help kickstart planting efforts. Karen Braun is a market analyst for Reuters. Views expressed above are her own.

(Editing by Michael Perry)