May 23 (Bloomberg) -- Hedge funds cut their bullish bets on wheat to the lowest this year on speculation that supplies would be adequate to meet global demand. Speculation on higher corn and soybean prices also declined.
The funds and other money managers slashed wheat net-long positions by 54 percent to 11,206 futures and options contracts on the Chicago Board of Trade in the week ended May 17, data from the U.S. Commodity Futures Trading Commission show. That’s the lowest since speculators were net-short in late November.
Wheat prices, down 4.4 percent in the week through May 17, have slumped 12 percent since reaching a peak on Feb. 14 of $9.1675 a bushel, the highest since August 2008. On May 11, the U.S. Department of Agriculture said domestic inventories will total 702 million bushels next year, more than analysts forecast.
“We saw some pretty measurable declines in the market,” said Tim Hannagan, a grain-market analyst for PFG Best Inc. in Chicago. “Traders started to reduce the size of their positions.”
Since May 17, price have rallied as wet weather delayed U.S. planting. The next CFTC Commitment of Traders Report, which tallies holdings through May 24, may show a rebound in net-long positions, Hannagan said.
Wheat futures for July delivery fell 5.5 cents, or 0.7 percent, to settle at $8.065 a bushel on May 20 on the CBOT. The price still increased 11 percent for the week, the biggest such gain since December.
“All of a sudden, what was bearish in the week prior is becoming bullish again, so I think we’ll see an increase in” investor holdings, Hannagan said.
As of May 17, bullish corn bets were down for a fourth straight week to 289,039 contracts. Net-longs in soybeans fell to 5.5 percent 85,421 contracts, the lowest since July.
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