FORT COLLINS, Colo.- Rain-driven planting delays for U.S. corn have been dragged out long enough to cause a noticeable rally in Chicago-traded futures, but speculators were not yet ready to shed their enormously bearish positions as of early last week.

According to the U.S. Department of Agriculture, only 30% of U.S. corn acres were planted as of May 12, the fourth-slowest in records back to 1980 and well behind the five-year average of 67%. That data was reported last Monday, and weather forecasts have not significantly dried out in the days since.

CBOT corn futures shot upward on Tuesday on the slow planting, but sizable fund buying on that day did not outweigh selling in the previous sessions.

In the week ended May 14, hedge funds and other money managers increased their net short position in CBOT corn futures and options to 282,918 contracts from 282,327 in the previous week, according to data from the U.S. Commodity Futures Trading Commission. 

CBOT July corn futures CN9 finished at $3.83-1/4 per bushel on Friday, the highest settle for the most-active contract since Dec. 18. The December 2019 contract CZ9 , which is a benchmark for the upcoming harvest, touched $4 on Friday for the first time since late March.

July corn hit contract lows last Monday but rose nearly 9% through Friday, the largest five-day percentage rise for most-active futures since early July 2017. Futures had been up fractionally over the five-day period ended May 14, which is the period covered by the latest CFTC data.

Trade estimates suggest that commodity funds bought around 73,000 corn futures contracts between Wednesday and Friday.

U.S. planting weather over the last week was not perfect, so a massive jump in corn progress as has been observed in previous slow years may be unlikely on Monday. This may force funds to continue to cover short positions early this week.

However, the producer is still holding a good chunk of corn. Through May 14, producers cut their net short to 4,516 futures and options contracts from 16,340 in the previous week. They likely unloaded a good amount of grain onto the market late last week. 

The other factor that needs to be watched is the South American corn crop. Earlier this month, USDA raised Brazil’s output to a record 100 million tonnes, and the harvest has not even begun. Argentina’s crop was also bumped to a record 49 million tonnes, and together the two countries are expected to collect at least 35 million more tonnes of corn this year than last.

SOY MEGA-BEARS

In the week ended May 14, money managers extended their net short in CBOT soybean futures and options to a record 168,835 contracts from 160,553 a week prior. 

Average U.S. soybean planting progress is around 29% on May 12, so this year’s 9% was noticeably behind. Soybean futures rallied on this news last Tuesday, and the most-active contract was up fractionally for the five-day period ended May 14.

But that excitement faded later in the week, as soybeans fell 1.2% between Wednesday and Friday. U.S. corn planting was threatened enough to potentially cause an unneeded switch to soybeans, and commodity funds were seen as very slight net buyers of the oilseed over the last three sessions.

The lack of a trade deal between the United States and its leading soybean buyer, China, has also vexed traders for more than a year now, and the unrelated development of African swine fever across China’s hog herd had lent yet another blow to the crippled market as it has reduced feed demand.

As in corn, producers still have a lot of soybeans to sell. They had cut their net long through May 14 to 66,862 futures and options contracts from 70,077 in the previous week, but that is still historically heavy. 

Speculators were also pessimistic on the soy products in the week ended May 14. In soybean meal futures and options, money managers extended their net short position to 39,633 contracts from 33,135 in the previous week.

They also boosted their net short in soybean oil futures and options to 80,406 contracts from 70,850 a week earlier. That is funds’ most bearish stance on the vegoil since September and was their thirteenth straight week of selling.

Commodity funds were seen as light net buyers of both soy products between Wednesday and Friday.

(Editing by Matthew Lewis) ((karen.braun@thomsonreuters.com +1 (312) 408-8059 Reuters Messaging: karen.braun.thomsonreuters.net@reuters.com; Twitter: @kannbwx))