In Naperville, Illinois, on Feb 2 (Reuters) - The surge in speculators' overwhelmingly optimistic Chicago corn positions has been widely covered.
However, the escalating and currently unparalleled contrast between investors' corn and wheat stances may have gone overlooked.
During the week ending Jan. 28, money managers raised their net long in CBOT corn futures and options to 350,721 contracts from 311,678 the previous week, marking their most bullish stance since May 2022.
This shift was driven mainly by new gross long positions despite a 1% drop in the most active CBOT corn futures that week.
While CBOT wheat futures declined by 2.4% in the week ending Jan. 28, money managers intensified their net short in CBOT wheat futures and options to a 14-month peak of 110,782 contracts. This increase was mainly due to new gross shorts.
The disparity between money managers' corn and wheat positions has never been this pronounced since records began in 2006, becoming more evident over the past five weeks.
The closest instances of funds being extremely bullish on corn and bearish on wheat occurred in early 2023 and mid-2016. Notably, significant weekly corn sell-offs followed these periods.
However, the current scenario is so distinct that past examples may not be relevant. Additionally, the time of year and the scale of funds' corn position may favor bullish corn positions in the short term.
Although corn and wheat prices can sometimes move in sync due to their interchangeable use, the low wheat premium over corn at 77-1/2 cents per bushel as of Friday indicates a relatively low premium compared to the past five years.
Over recent months, CBOT corn futures were supported by robust U.S. demand, decreasing global supplies, and lately, weather worries for South American crops. Meanwhile, dominant Russian supplies restrained wheat prices.
Despite these factors, bullish outlooks in the grain sector may face challenges from the U.S.'s new trade dispute with Mexico, Canada, and China, which comprised half of U.S. agricultural and related product exports in 2023.
U.S. President Donald Trump announced tariffs on Mexican and most Canadian imports, and a 10% tariff on Chinese goods starting on Tuesday.
In the week ending Jan. 28, the most-active CBOT soybeans dropped by 2.1%. Still, money managers increased their net long to a 14-month high of 56,496 futures and options contracts from 40,330 the previous week.
Short covering was predominant in the soy complex. Money managers also extended their net long in CBOT soybean oil futures and options to a 10-week high of 39,768 contracts from 24,214 the week before.
Additionally, they reduced their large net short position in CBOT soybean meal futures and options through Jan. 28 to 52,291 contracts, down around 9,000 from the previous week. Both soyoil and soymeal futures experienced losses during that period.
CME live cattle futures hit record highs last week, with money managers holding a record net long of 156,909 futures and options contracts as of Jan. 28.
However, they established a record net short in ICE No. 2 cotton futures and options of 53,574 contracts, up more than 5,000 from the previous week. Cotton futures reached nearly six-month lows on Friday, impacted by China's reduced U.S. cotton purchases and tariff concerns.
On Saturday, the United States reopened the door for cattle shipments to , blocked since November due to screwworm cases. This development, among others, recently backed cattle futures, although the impact of tariffs on this trade flow remains uncertain.
Karen Braun is a market analyst for Reuters. Views expressed are her own.