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

NAPERVILLE, Illinois - In the final week of September, speculators staged a hefty round of short covering in Chicago-traded corn and in the soybean complex, potentially reducing risk ahead of an often-unpredictable U.S. government report.

CBOT corn, soybean and soybean product futures have all worked their way off recent multi-year lows, as demand recovery has also coincided with some drought-related crop concerns in major suppliers.

In the week ended Oct. 1, money managers halved their net short position in CBOT corn futures and options to 67,699 contracts, their least bearish view since early August 2023. The associated short covering was the largest for any week in nearly five months.

Most-active CBOT corn rose 4.2% in the week ended Oct. 1, which included the release of the U.S. Department of Agriculture’s quarterly grain stocks on Sept. 27. That report showed lighter-than-expected U.S. corn supplies as of Sept. 1, and strength in both wheat and soybeans also lifted corn futures during the period.

Money managers slashed bearish views in CBOT soybean futures and options through Oct. 1 with a sixth consecutive week of short covering, although new long positions accounted for 40% of the move. That dropped their net short to an 18-week low of 34,886 contracts, down more than 40,000 on the week.

Most-active CBOT soybeans were up more than 1% that week, though CBOT soybean meal surged nearly 7% while soybean oil eased 1%.

SOY PRODUCTS

In the week ended Oct. 1, money managers boosted their net long in CBOT soybean meal futures and options to 103,209 contracts, record-high for the date. That reflected an increase of nearly 45,000 contracts, the most for any week since March 2020.

Although funds covered an abnormally large number of short meal positions, new longs accounted for 60% of the latest move. More than 27,000 gross meal longs were added through Oct. 1, a weekly record in data back to 2006.

Despite the week’s price slide, money managers heavily covered short positions in CBOT soybean oil for a second week, flipping to a net long for the first time in six months. The resulting net long of 15,803 futures and options contracts compares with a net short of 18,856 a week earlier.

That marked funds’ most bullish soyoil stance in nearly a year, and the optimism may have expanded further last week as futures were up another 2.5% over the last three sessions.

Corn, soybean and soymeal futures eased between Wednesday and Friday as rains are forecast for parched soils in Brazil. The U.S. corn and soy harvests may pressure futures as another week of dry weather will continue to support efficient fieldwork.

WHEAT AND BEYOND

CBOT wheat prices this month have reached their highest levels since mid-June on multiple supply concerns. Top wheat exporter Russia is dealing with a historic drought, and weather is also threatening crops in other major exporters, including Australia and Argentina.

Most-active wheat was up 3.6% in the week ended Oct. 1, and money managers trimmed their CBOT wheat net short to a two-year low of 22,953 futures and options contracts from 26,469 a week earlier.

CBOT wheat futures dropped 1.5% over the last three sessions after notching new highs on Wednesday. As of Sunday, forecasts suggest winter wheat-heavy regions of Russia could be due for a decent shot of moisture in about a week.

Aside from monitoring weather models, the trade this week will be anticipating USDA’s next monthly supply and demand data due on Friday. That will be headlined by U.S. corn and soybean yields, which always contain the risk for surprise. Karen Braun is a market analyst for Reuters. Views expressed above are her own.

(Editing by Cynthia Osterman)