Speculators cut their net long positions in Chicago Board of Trade (CBOT) corn, soybeans and wheat, taking money out of markets that have surged due to a drought that decimated crops across the U.S. Midwest, regulatory data released on Friday showed.
The U.S. Commodity Futures Trading Commission's (CFTC) weekly commitments of traders report showed that noncommercial traders, a category that includes hedge funds, slashed their bullish bet in corn by 11.7 per cent in the five trading days ended Sept. 11.
The sales left them with their smallest net long in corn in nearly a month and came as reports from early harvest in some parts of northern Iowa and southern Minnesota showed that damage to crops was not as bad as some had feared. Traders said that yields in those areas, while still incredibly poor, were coming in above lowered expectations.
Corn prices fell 3.4 per cent during the week and the speculators sold 24,739 long contracts while buying 7,031 shorts, leaving them with a net long position of 239,873 contracts.
The U.S. Agriculture Department's latest forecast, issued on Sept. 12, cut its corn yield estimate by only 0.6 of a bushel per acre. That followed reductions of more than 20 bushels per acre in its previous two reports.
Speculators also cashed in soybean positions as some late arriving rains boosted hopes that the health of some soybean plants could improve late in the season.
CFTC data showed the speculators selling 16,408 long contracts and 2,943 shorts as futures prices dropped 3.8 per cent. The noncommercial traders were net long 194,679 contracts in the commodity after the sales.
Speculators also cut their long position in CBOT wheat by 3,072 contracts, adding 3,731 shorts and 659 longs to leave them net long 8,664 contracts.
Index funds, which typically hold positions for longer periods of time than managed funds cut their net long stake in soybeans and wheat but raised it slightly in corn.
-- Reporting for Reuters by Mark Weinraub in Chicago.