The exit of speculators from corn may, like that from agricultural commodities, have slowed, but may have further to run as macroeconomic concerns deter investment.

The sell-down of US-traded commodities by managed money - taken by many analysts as a proxy for speculators or hedge funds – braked considerably in the week to last Tuesday, data from the Commodity Futures Trading Commission showed.

For the top 16 commodities, the reduction in net long positions in futures and options slowed to a "marginal" 1.7% - from a "staggering" 23.6% the week before, Standard Chartered said.

"Repositioning by traders in the week to November 29 was much more subdued, with a net speculative decline of about 1-2% for each sector," StanChart analyst Kuon-Ken Lee said.

'More liquidation coming' 

The declining pace of liquidation saw the decline in managed money's net length in Chicago corn drop by 8,100 contracts, to 141,017 lots - compared with a reduction of 48,500 contracts in net length the week before.

However, this decline in pace does not necessarily signal the end, Jon Michalscheck at Benson Quinn Commodities said.

Based on the fall in corn prices since last Tuesday "we could see a modest slowdown in terms of liquidation" when the CFTC unveils its next data, late on Friday.

"But we would be surprised if it [liquidation] doesn't continue as we move towards the end of the year unless there is an unexpected fundamental change to the market."

'Significant increase  in stocks'

Corn investors have been deterred by a weak pace of US exports, with Paragon Economics and Steiner Consulting noting that "large world corn importers, including Japan but also China, have been pulling back on their orders.

"Some have increased their use of feed wheat as offers appear to be below US corn values."

And, with talk of US corn sowings reaching a post-World War II high next year, traders are increasingly factoring in a revival in inventories, assuming better weather.

Even plantings at this year's level would, "if yield prospects return to normal and demand is constant… result in a significant increase in ending stocks", Texas A&M University agricultural economist Mark Welch said.

"Prices closer to $5.00 a bushel than $6.00 could be ahead in such a case."

Corn vs wheat 

Furthermore, appetite for long positions in corn is being sapped by a "short corn, long wheat" trade being encouraged by the high net short exposure speculators already have to Chicago wheat, making them wary about adding more.

At Australia & New Zealand Bank's London office, Scott Briggs, director agricultural commodities, noted last week that "obviously the call had gone around from some angle that buy wheat - sell corn was 'the trade', because we heard that three times at least", in one day.

"We also heard five times about the massive speculative short in Chicago wheat that should leave everyone wary."

In the week to last Tuesday, speculators' net short in wheat fell from a multi-year high by 7,400 lots to 43,203 contracts.

'Cause to buy'

Furthermore, weather has raised itself increasingly as a concern - most notably in Ukraine, where the dry conditions which have beset winter-sown grains have prompted the country's farm ministry to warn of net imports of wheat for the first time since 2004.

In Australia, wet weather is damaging crop condition, with grain handler CBH, which controls the market in Western Australia, the country's top grain growing state, reporting that one of its four zone, Esperance, has "once again been plagued by high moisture issues".

"With Ukrainian authorities suggesting a possible requirement to import wheat and Australia remaining wet for the coming week the wheat bulls may find cause to buy at current levels," FCStone's Dublin office said in a report on Monday.