Large speculators bulked up their net long position on the Chicago Board of Trade corn and soybean markets in the past week and reduced their net short position in wheat amid a continued strong global demand outlook for raw commodities like grains.
The move came despite a credit crunch and turmoil in the financial sector that sent many investors fleeing traditionally volatile commodities markets for safe havens such as gold and bonds over the past two weeks.
Large speculators, excluding index-type funds, cut short holdings in CBOT corn futures and options by more than 13,100 contracts in the week ended September 23 while trimming longs by only 100 contracts, according to the Commodity Futures Trading Commission Commitment of Traders report released on Friday. In soybeans, they cut short positions by 4,500 contracts while trimming longs by just under 700, CFTC data showed.
"The non-commercials are starting to want to own tangible commodities like corn and soybeans with the harvest getting underway," said Joe Victor, analyst with commodity research firm Allendale Inc.
"We're fairly certain of the kind of production that is out there, but at the same time there remains a fairly decent increase in demand both domestically and globally," he said. Tight ending stocks also fuelled speculator optimism about corn and soybeans, he said.
CBOT corn and soybean futures traded in a broad range over the past week, reacting to fluctuations in crude oil and gold, but finished the week lower amid broader economic concerns, traders said. As of late Friday, US lawmakers had yet to agree on a $700 billion financial rescue plan for the financial sector. President George W. Bush said there are disagreements on parts of the plan but that a rescue package will get passed. CBOT December corn futures settled 15-1/4 cents lower on Friday at $5.43 a bushel, down or 2.7 percent. November soybeans were 19 cents lower at $11.64 a bushel, down 1.6 percent.
SPECS CUT WHEAT SHORTS: Large speculators remained net short in CBOT wheat futures and options in the week ended Tuesday amid record global wheat production. But their net short position narrowed as they exited more than twice as many short positions as longs, CFTC data showed. "Even with record world production on wheat, consumption continues to be a record and you have to ask yourself if we can maintain that kind of global production in wheat when you have competing crops such as corn and soybeans," Victor said.
The International Grains Council on Thursday raised its estimate for world wheat production in 2008/09 to a record 676 million tonnes, up 4 million from its forecast a month ago. CBOT December wheat settled 20-1/4 cents lower on Friday at $7.16 a bushel, down 2.75 percent.
Index funds, which normally buy and hold for the long term, slashed long holdings in corn and soybeans in the week ended Tuesday, but remained heavily on the long side of the market, CFTC data showed. Their net long position in CBOT wheat was virtually unchanged.
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