Funds trim bearish CBOT soybean bets awaiting Brazil rains

Speculators maintain bearish soy view despite slight rise in CBOT soybeans, with funds holding heavy net short positions.

Ample global supplies have kept speculators on the short side of the Chicago grain and oilseed markets so far this year, though droughts across many key exporters are now giving bears some pause.

Top soybean exporter Brazil is amid one of its worst-ever droughts, which is slowing the early planting efforts. Weather models have yet to confirm that sufficient relief is coming soon.

In the week ended September 17, money managers trimmed their net short position in CBOT soybean futures and options to a 13-week low of 1,22,415 contracts, down more than 8,000 on the week.

This remains funds’ most bearish soy view for the time of year despite being a third lighter than their all-time net short set in July. Speculators have held a net short in CBOT soybeans since the beginning of the year after nearly four years in bullish territory, but they can prolong bearishness, too. From June 2018 through March 2020, money managers were net short 85% of the time.

Most-active CBOT soybeans rose nearly 1% in the week ended September 17. CBOT corn was up 2%, but money managers were slight net sellers of the yellow grain, increasing their net short by less than 3,000 to 1,34,814 futures and options contracts.

That is roughly the same corn stance that investors held a year ago, when corn futures were trading about 19% higher than the current levels near $4 per bushel.

The U.S. Department of Agriculture on September 12 increased its estimate for U.S. corn yield, against expectations for a reduction, and soybean yield was identical to the prior outlook. Both are set to be record large, but dry and warm weather over the last two months could shrink yields.