By Karen Braun

FORT COLLINS, Colo. Reuters – Chicago oil and grain futures experienced a massive run in early last week due to tensions between Russia, Ukraine. But it did not inspire already-bullish speculators quite as strongly as it might have appeared.

Russia invaded Ukraine in full force on Thursday morning, sending wheat futures up to multi-decade heights. The market closed the week with a different tone, though. As the crisis worsens, it is unclear what the future holds for that selloff.

Commodity funds bought 133,000 contracts for CBOT futures during the four session week from February 22 to 23. These were available in all three commodities: wheat, corn and soybeans. The actual level of buying, including options was less than half.

However, speculators’ combined net long in CBOT grain futures and options, including K.C. The highest levels of Minneapolis wheat and CBOT grain futures options were reached in February 22nd, compared to May.

Funds’ soybean buying was by far the most misjudged in the week ended Feb. 22, which had been pegged by trade estimates at 44,500 futures contracts after most-active soybeans jumped more than 5%.

Data from the U.S. Commodity Futures Trading Commission on Friday showed money managers’ net long up less than 5,000 on the week to 180,334 soybean futures and options contracts, their most optimistic view since the end of 2020.

On Feb. 22, money managers were more bullish than ever about soybean meal since June 2018 with 90,417 futures options contracts and futures. This compares to the 89.170 view a week ago. For the entire period, futures were up by 2.7%.

Soybean oil futures increased 6.7% that week and money managers’ net long rose nearly 9,000 futures and options contracts to 79,200, a three-week high.

Funds’ corn and wheat buying was closer to expectations but still light considering the moves. The CBOT Wheat futures have risen 9.3% over the four session ending February 22, which coincided with a 16.600 contract reduction in managed money net short that fell to 18,053 options and futures contracts.

Through Feb. 22, money managers in corn added approximately 29,000 options and futures contracts, mostly to new longs. This resulted in a net long total of 354,436 contract. In line with seasonal trends, index traders decreased the number of wheat and soybean contracts they hold.

(Graphic- Managed money combined net position in CBOT/MGEX futures and options: https://fingfx.thomsonreuters.com/gfx/ce/gdpzybwkavw/cftc_all_22feb.png)

Uncertain Future

CBOT grain and oilseeds plunged on Friday, but the contrast of the previous day’s surge complicates the assessment of market mood and whether the selling will continue.

Most-active soybeans early in Thursday’s trade came within 30 cents of 2012’s all-time high of $17.89 per bushel, more than 5% above Wednesday’s close. Friday’s settle of $15.84-1/2 per bushel was nearly 10% off the previous day’s high, and the selloff was of similar magnitude to the one on June 17, 2021.

CBOT wheat surged to $9.60-3/4 per bushel early on Friday, the most-active contract’s highest level since June 2008. However, wheat managed to settle down at $8.59-3/4 the increased daily limit of 75cs per bushel. This was an 8% decrease from Friday’s session.

Corn managed to avoid a limit-lower close Friday. It plunged 5% and ended at $6.55-3/4 per Bushel. A day earlier it was at $7.16-1/4. This is the highest price since June.

The CBOT soybean oils reached all-time records on Thursday. Malaysian palm oil was next on Friday. On Thursday, soybean meal futures hit their highest point since 2014. Meal declined 2.8%, while soyoil fell 4.2%.

The trade estimates show that commodity funds have sold an average of 5,000 futures contract across the CBOT wheat, soybeans, and other products. But that might be light due to Thursday’s large volumes and massive move off the highs in corn and soybeans, and wheat’s limit-down Friday.

The CBOT Wheat futures ended the previous three sessions with 0.9% increase, 2.8% decrease in soybeans, 3.1% drop in corn, and meal, 1.8% decline, respectively. Soyil was down 1.6%.

Karen Braun works as a market analyst at Reuters. The views and opinions expressed here are hers.