February 26, 2007

 

Funds add to huge long position in CBOT corn

 

 

Large speculators added to their large net long position in CBOT corn futures and options for the second consecutive week in the week ended February 20, a Commodity Futures Trading Commission (CFTC) report showed on Friday.

 

Traders had expected an increase in the speculative long position in CFTC's corn data since the corn market had climbed 7 cents per bushel basis on the CBOT March contract during the week ended Tuesday.

 

The market is poised for an even greater jump in fund longs next week because corn futures prices rallied to fresh 10-year highs late this week which boosted CBOT open interest for corn to record highs at over 1-1/2 million contracts.

 

A large spec added 11,062 long positions in corn futures and options a week after they added 33,829 longs. By the close Tuesday, they were net long 346,768 lots, up 8,758 contracts from net long 338,010 the previous week.

 

Index funds were net long 353,069 lots corn, up 8,542 from net long 344,527 contracts the prior week.

 

Speculators maintained a large net long position in soybean futures and options as well. Soybeans have rallied to a 2-1/2 year high, trying to keep up with rallies in corn.

 

U.S. corn acreage was expected to rise significantly this year at the expense of soybean acres. However, South America is projected to harvest a bumper crop in 2007, although wet weather in key growing regions in Brazil has delayed harvest.

 

Large specs were net long 93,352 lots in soybean futures and options in the week ended Tuesday, down 453 from net long 93,805 the previous week. Index funds were net long 136,792 lots, up 1,254.

 

The fund position in CBOT wheat futures and options was about unchanged in the week ended Tuesday amid little fundamental news to rally the market. Index funds maintained their huge net long position, narrowing it only slightly.

 

Crop conditions and soil moisture levels were mostly favourable in the U.S. Plains and Midwest, which could boost yields in 2007. World wheat output was also expected to rise this year.