Falling corn and soybean markets are behaving likes ones that "simply have too much speculative length", traders warned, even as data showed hedge funds continuing to cut their bets on rising prices.

Managed money, a proxy for hedge funds, cut its net long exposure to Chicago corn futures and options by more than 12,200 contracts to the lowest in two months, data from the Commodity Futures Trading Commission showed.

In soybeans, the net long position – the advantage of long bets, which gain when prices rise, over short holdings which profit when values fall – fell for a fifth successive week, dropping below 177,000 contracts for the first time in more than six months.

The data are accurate as of last Tuesday, two days ahead of US Department of Agriculture crop estimates which, in forecasting strong demand for US corn and soybean supplies, prompted – temporary – relief from a downward trend in prices.

However, the return of values to falling since suggests that funds still have unfinished business to do in liquidating positions, traders said.

'Too much speculative length'

"The general feel in the ag sector is that corn and soybeans are still trading like markets that simply have too much speculative length," Brian Henry at broker Benson Quinn Commodities said.

US Commodities said: "Funds are now unloading their long positions. It is this long position that is short-term pressing the market lower."

Prices continued falling on Monday, when soybeans dropped below $15 a bushel for the first time since June, and at one point posted a drop of 2.3% to $14.86 ¾ a bushel.

Corn for December eased 1.8% to an intraday low of $7.39 a bushel.

Indeed, the best performer of Chicago's big crops was wheat, in which managed money undertook last week its biggest clear out of net length in four months, by more than 10,000 contracts, with negative sentiment boosted by rains which improved prospects for US winter grain sowings.

'Below the historical average'

Among soft commodities, speculators trimmed their net short position in cotton for the first time in five weeks, amid talk of a poor quality US crop which continued on Monday.

"This is well below the historical average of around 70%."

And managed money raised its net long position in New York raw sugar by more than 25,000 contracts, the highest in three months, amid ideas of a slowdown in the cane crush in Brazil's Centre South region which were confirmed by industry group Unica last Tuesday.

However, in coffee, speculators turned net sellers, as fears eased for the impact of a dry spell which following a promising lowering period in major Brazilian coffee regions.