Deutsche Bank's $2.3bn PowerShares agriculture index fund is ahead in ditching sugar positions, but behind in corn, a restructuring sparked by a regulatory clampdown on holdings in individual commodities.

The exchange traded fund disposed of nearly $300m in sugar investments by the end of last week, the half-way point in a rebalancing programme which will see about half its positions turned over.

The sell down leaves PowerShares managers with roughly a further $200m to go if they are to get their sugar position down to the 17.3% weighting shown by the revised index that the fund will track.

However, the fund appeared behind in reducing its corn exposure, cutting its position by some $50m by Friday, but with index weights implying a further $100m to go, data published by Deutsche Bank indicated.

The fund was also lagging in trimming smaller positions Minneapolis and Kansas wheats, while dead on track for buying in the commodities in which the fund is set to gain exposure, including cattle, coffee and hogs.

Traders' concerns 

The prospect of Deutsche Bank's position changes, which the bank said it would undertake between October 19 and October 31 "at a rate of approximately 10% a day", raised concerns among commodity traders of an accelerated slide in the prices of positions sold down.

"Many traders think the Deutsche Bank selling of long positions in wheat and corn over the next two weeks will take place on the close," Vic Lespinasse at GrainAnalyst.com said on October 19.

"So they expect pressure in December corn and wheat late in the session in these pits continuing through the end of the month."

However, the disposals, of which Deutsche has not unveiled transactional details, co-incided with a strong week for both grains, with spot contracts for corn gaining 7% and wheat nearly 10% in Chicago.

New York sugar lost 3.7% over the week.

Regulatory changes 

The PowerShares shake-up was prompted by the withdrawal by US regulators of consent to breach federal restrictions on wheat and corn, amid a drive by authorities to clampdown by perceived flaws in market pricing.

Funds have been blamed by some politicians and officials for fuelling last year's spike in prices, and for mismatches, which have topped $1 a bushel, between cash and futures prices of wheat.

This year, holdings in exchange-traded-fund products jumped by 60% to $59.6bn by August, National Stock Exchange data showed.

A Deutsche Bank spokesperson declined to comment on the position changes.