Hedge funds have extended their misfortune on agricultural commodities, as increasingly negative sentiment on sugar and livestock more than offsets a reevaluation of laid-back positioning on wheat.
According to data from the Commodity Futures Trading Commission regulator, managed money cuts its net long position in futures and options in the top 13 U.S.-traded agricultural commodities from coffee to corn by more than 18,000 contracts in the week leading up to last Tuesday. It was the eighth consecutive week in which hedge funds reduced their net long.
The drop is fuelled by the increasing confidence in record U.S. corn and soybean crops and reduced fears over sugar supplies too, despite drought issues to Brazilian sugarcane.
Sugar suffered another week of selling by hedge funds. It raised their net short position in the New York-traded futures and options in the sweetener by more than 9,500 contracts to a six-month high of 27,327 lots.
Hedge funds were notable sellers in the livestock complex. Their net long in Chicago lean hog futures and options were cut by more than 5,000 contracts to a seven-month low of 43,198 lots.
The net long for live cattle fell by more than 10,000 lots to 104,442 contracts, the weakest reading of the year, after Russia banned buy-ins of U.S. agricultural products, along with seasonal factors.
Hog values have faced extra pressure from high slaughter weights and a big drop in the rate of porcine epidemic diahorrea virus (PEDv).
Hedge funds for grains continued to push back from negative price expectations which drove their net short in Chicago futures and options to the second highest on record in late July.
Price support has come from concerns over the Ukraine crisis, along with worries over the quality of supplies in a variety of geographies, including the U.S., where the soft red winter wheat crops has shown high rates of vomitoxin, a toxic fungal residue, now being reported in the spring wheat harvest, as well.
Hedge funds for Chicago soybean futures and options have returned to extending their net short by almost 5,000 contracts to 16,698 lots.