By Karen Braun

FORT COLLINS, Colo. (Reuters] – Speculators lost short positions in Chicago-traded soybean meals last week due to tightening conditions in the U.S. Market. Futures soared to new highs since July.

Funds began recently building large shorts in soybean meal, the only oil or grain for which they were able to do so. However, funds began to ease up as supply problems surfaced last month. The week ending Nov. 16 saw most active futures rise 7.3%, after a steady climb from their mid-October low.

The week ended with money managers increasing their net longs in CBOT soybeanme meal options and futures to 37,488 from the 9,299 they had previously. This was their largest round of meal short-covering since August 2020. Gross shorts fell to a three month low.

On Friday, data from the U.S. Commodity Futures Trading Commission showed that more than 31,000 soy meal shorts were added by commercial end users through Nov. 16. This was their largest weekly increase since early 2020. The crush margins for this time of the year are extraordinary.

Futures on soybean meal added 1.2% to their prices between Wednesday and Friday. Friday’s settlement of $371.80 for a short ton was 20% higher than the Oct. 13 low.

Recently strong soybean meal could have prevented commodity funds flipping to the short side of CBOT soybeans. This is the first flip since early 2020. Money managers increased their soybean net long to 29,488 futures and options contracts through Nov. 16 from the previous week’s 12,137 contracts, which had been the lowest since June 2020.

The majority of this was due to short coverage, with most-active soybean futures rising 3.2% in the last week. Futures touched their high point on Wednesday, Sept. 30, but fell 1% in the previous two sessions. Global soybean fundamentals remain slightly bearish.

Although soybean oil was once considered to be the most important in the soy-complex, the majority of active futures are now trading at around 60 cents per barrel for the past few months. It is the most expensive for this year.

November 16th, saw money managers increase their net long in CBOT soybean futures options and contracts to 76.212, up from 72.605 one week before.

The most-active soybean oil was up 1.2% this week, but fell nearly 2% over the three previous sessions. This happened mainly on Friday. Although oil dropped to over a month lows Friday, rival vegoil palm oils traded last week close to all-time highs at the Malaysian Exchange.

GRAINS

Money flow into commodities amid inflation anxiety was very apparent in the corn market last week with index traders’ total number of CBOT corn futures and options contracts jumping 9% through Nov. 16, reaching the highest levels since early August.

The most-active corn futures rose almost 3% in the week due to strong U.S.ethanol production and high global grain prices. From 319,609 one week prior, money managers have increased their net long corn options and futures to 341,135 contracts.

It was mostly due to an increase of gross longs. In May, the net long had reached its highest since May. Funds’ corn net long was around 279,000 contracts in the same week a year ago, and the 2021 low was set in mid-July around 209,000 contracts.

Index funds’ interest in Chicago wheat also rose last week, though to a lesser degree than in corn, and futures hit nine-year highs on tightness in the global wheat market. In the week that ended on Nov. 16, CBOT Wheat gained 4.1% and added 3% to the last three sessions.

Money managers have increased their net short in CBOT Wheat futures and options by 15,258 contracts, from the previous week’s 3,328 to reach 15,258 through Nov. 16. This is the most positive position they have held in 3 months, and it is almost identical to their year-ago position.

Money managers’ net long in Kansas City wheat through Nov. 16 reached its highest point since August 2018 at 60,560 futures and options contracts, up from 57,382 a week before. Hard red winter wheat futures also hit multiyear records late last week. Futures increased another 1.9% between Wednesday, Friday and December.

Minneapolis wheat continues to trade above $10 per bushel, record strong for the date, but futures on Friday finished well off the month’s high. Through November 16, money managers decreased their spring wheat net short by more than 1,500 futures and options to 14,963 contracts.

Karen Braun, a market analyst with Reuters, is the author of these opinions.