There was a spate of short covering in agricultural commodity markets ahead of last week’s big US government data release, while speculators got caught out by the slide in soft futures.
Managed money, a proxy for speculators, cut its short position in futures and options in US-traded grains by around 68,000 lots in the week to last Tuesday, analysis of data from the Commodity Futures Trading Commission regulator shows.
This leaves the net-short in grains, the extent to which bearish bets outnumber positive bets, at the lowest point since this time last month.
The move reflects short-covering ahead of global agricultural supply and demand data, which was released on Tuesday by the US government.
Surprising wheat short
The strongest sentiment was seen in soybeans, where speculators cut bearish bets at the fastest rate since August.
Hedge funds are still net-short on soybeans, to the tune of around 11,000 lots, but this is the smallest net-short for the commodity since the end of October.
But for Chicago wheat, a small spate of short covering only edged the net-short back from the six month high reached in the last weekly CFTC report.
CHS Hedging said the size of the net-short remained, “a bit more than the trade would expect”.
Short-coverers caught out
In softs, hedge funds extended long-buying, leaving the biggest net-long position in these commodities since June of last year, at over 28,000 lots.
The move came ahead of a broad sell-off in softs.
Sugar bulls in particular got their fingers burned, by ramping up their positive bets, ahead of a market slide.
In the week to Tuesday, managed money, racked up the largest net-long on New York raw sugar futures for over two years.
Front-month raw sugar futures have lost 7.4% since Tuesday.
Broad sell-off
And moves were even more bullish in New York cotton, where speculators delivered the biggest net-long in a year-and-a-half.
As with sugar, the move left speculators out of pockets, as front-month cotton prices are down nearly 2% since last Tuesday.
And speculators racked up the biggest net long in New York cocoa futures since June, before prices slid over 1%.
Hedge funds retained a net-short in New York arabica coffee, albeit the smallest since October.
Any short-coverers will have been counting the cost, with March arabica futures down over 5% since Tuesday.
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