Speculators were wrong-footed by last week's huge US corn exports, holding their lowest net long position in the grain for nearly two years in the run up to the deals – and may have left themselves open to being caught out in sugar too.

Managed money, a proxy for speculators, slashed its net long position in Chicago corn futures and options by more than 43,000 contracts in the week to last Tuesday, regulatory data showed.

The cut left the net long position – the advantage of long positions, which profit when values fall, over short holdings, which benefit when prices drop – at 103,000 contracts, the lowest since summer 2010, and well down from levels of roughly 300,000 lots hit earlier this year.

And the reduction came ahead of a series of announcements of US corn exports, culminating in the best single day in more than 20 years on Friday for sales, when Chicago's May contract soared nearly 5%.

'Shot in the arm'

Indeed, Country Futures analyst Darrell Holaday highlighted a "short squeeze", as investors scrambled to cover short positions, as a major reason behind the extent of Friday's rally.

The 2.7m tonnes of US corn exports announced last week by the US Department of Agriculture through its daily alerts system had been a "shot in the arm for the corn market", he added.

At Australia & New Zealand Nank, Paul Deane said that the low level of speculative net long interest "had helped push old crop corn prices into undervalued territory".

"This set the scene for Friday's price action in corn – where yet another announcement this week of US corn export sales finally saw prices firm."

Funds were estimated to have purchased 21,000 corn contracts on Friday.

'Overshooting on the downside'

Speculators risked getting wrong footed by their huge selldown in New York raw sugar too, in which their net long fell a further 24,000 contracts in the latest week to 44,711 lots – only 1,000 from setting a fresh three-year low.

The sell-down reflects a "rerating" of sugar, whose prices have fallen 10% in the last two weeks, reflecting the weakening of the Brazilian real and growing hopes for Indian exports.

But the impact that managed money selling "is having on prices short term cannot be underestimated – the correlation between nearby futures prices and weekly speculative positioning has jumped to 99%", Mr Deane said.

"This market could well be overshooting on the downside as a result."

'Should trigger profit-taking'

Speculators' depleted interest in bets on rising corn and sugar prices contrasts with a record net long in Chicago soybeans during the last week, up 2,600 contracts to more than 243,000 lots.

Indeed, the oilseed was "overbought, which should trigger profit-taking when the market seems to lose momentum", Brian Henry at US broker Benson Quinn Commodities said.

Managed money also turned more positive on New York cotton, on which it returned to a net long position, while cutting a historically high net short in cocoa.