Spooked by tariffs, funds purge bullish corn bets in near-record fashion: Braun

(The opinions expressed here are those of the author, a market analyst for Reuters.)

NAPERVILLE, Illinois, March 9 (Reuters) – An imminent trade war between the United States and its two largest agricultural trading partners sent bullish Chicago corn speculators running for the hills last week.

But very few bears were made of the ordeal.

On Thursday, U.S. tariffs against most Mexican and Canadian goods were postponed until April. However, the levies had gone into effect on Tuesday and the market reaction was harsh, especially with Mexico the top destination for U.S. corn.

Most-active CBOT corn futures plunged 8.6% in the week ended March 4, their biggest such downturn since mid-2023. Money managers during the week slashed their net long in CBOT corn futures and options to 219,752 contracts from 337,454 a week prior.

Weekly net corn selling near 118,000 contracts was the second-largest ever, behind the 147,000 contracts sold during the week ended February 28, 2023. But last week’s reduction in gross longs, which exceeded 100,000 contracts, was by far a record.

On average, funds’ biggest net selling weeks in corn are somewhat evenly split between exiting longs and new short positions. An unusually low 11% of last week’s move owed to new gross shorts, suggesting that the selloff was more risk-off in nature rather than a genuinely bearish vote.

In the periphery of the week’s events, the U.S. Department of Agriculture predicted strong 2025 U.S. corn plantings and thus a recovery in domestic supplies, though that had been largely expected. South American corn crop outlooks have also recently improved.

But accessible global corn supplies are historically thin, especially in Brazil where stocks are the lightest in over two decades. Demand has persevered in the meantime, pushing investors to build their bullish corn stance after forging a record bearish one last year.

Speculators were also hefty net sellers in wheat and the soy complex during the week ended March 4, but unlike in corn, new short positions drove these moves.

Money managers ditched their net long in CBOT soybean futures and options, flipping to a net short of 35,487 contracts versus a net long of 8,209 in the prior week. Funds’ bullish stint in beans lasted just seven weeks, and net selling in the latest week was the strongest since last June.

Most-active CBOT soybeans fell nearly 5% through March 4, while soymeal eased 3% and soyoil plunged 7%. Funds erased much of their net long in CBOT soybean oil futures and options, which dropped to 9,669 contracts from 43,052 a week earlier.

Their net short in soybean meal futures and options reached a 10-week high of 85,344 contracts versus 63,193 in the week before, almost entirely the result of new gross shorts.

In CBOT wheat futures and options, the entrance of new gross shorts was the heaviest for any week since 2017. Money managers also added a handful of gross longs, though the net short grew to 82,399 contracts from 67,614 a week earlier.

So far this year, funds’ bearish wheat bets and bullish corn bets have been historically out of sync, though last week’s epic corn selloff pulled things closer to normal territory.

However, corn futures rallied nearly 4% over the last three sessions with the delay of U.S. tariffs on Mexico and Canada. Other gains were as follows: soybeans 2.6%, wheat 2.7%, soymeal 3.7% and soyoil 1.4%.

This week, the trade will be watching for the U.S. Department of Agriculture’s monthly supply and demand report due on Tuesday. Large changes are not anticipated, though the agency could factor tariff impacts into its estimates if deemed necessary. Karen Braun is a market analyst for Reuters. Views expressed above are her own.

(Editing by Himani Sarkar)