Hedge funds turn bearish on cocoa for first time in years...
By William Clarke - Published 19/12/2016

Managed-money funds are betting against the cocoa market, for the first time in four-and-a-half years.

But hedge funds turned bullish on lean hog markets at the fastest pace on record, as prices soar, according to weekly commitment of traders data from the US Commodity Futures Trading Commission.

Speculators' net longs in Chicago grains, Dec 13 (change on week)

Soybeans: 120,750, (-1,898)

Soyoil: 101,387, (-8,493)

Soymeal: 18,565, (-4,702)

Kansas wheat: 3,139 (-13,987)

Corn: -74,007, (-1,415)

Chicago wheat: -92,929, (+22,991)

Sources:, CFTC

As of last Tuesday, managed-money short positions in New York cocoa futures, which stand to benefit if prices fall, now outnumber long positions, for the first time since June 2012.

Bearish mood in softs

Hedge funds have been piling out of long positions in cocoa as production in West Africa exceeds expectations, and markets tumble.

New York cocoa futures are on track to finish 2016 some 30% lower.

And funds are turning bearish across other New York traded softs as well, with the combined managed-money net long for cocoa, arabica coffee, cotton, and raw sugar at its lowest level since May.

Surge in lean hog net-long

But the mood in livestock could not be more different, with the managed-money net long now at its highest levels since June 2015.  

The surge in livestock was driven by a massive shift in fund positions in the Chicago lean hog market.

Speculators' net longs in New York softs, Dec 13 (change on week)

Raw sugar: 159,820, (-12,007)

Cotton: 83,281, (-1,568)

Arabica coffee: 22,103, (-6,986)

Cocoa: -1,733, (-5,332)

Sources:, CFTC

Managed-money funds added 16,897 lots to its net long position over the week to last Tuesday, the biggest one week shift on records going back over ten years.

Rabobank saw Chicago the Chicago hog market supported ahead of "holiday-shortened kill weeks and strong seasonal demand," with cash prices likely to receive season support as slaughterhouses close down for the holidays.

Chicago wheat buying

Funds also turned more bullish on the main US-traded grains, thanks largely to managed-money short covering in Chicago wheat.

The managed-money-short in Chicago wheat is now at its lowest level since June, as hedge funds get in ahead of the index fund rejig, which is expected to lead to wheat buying next month.

Speculators' net longs in Chicago livestock, Dec 13, (change on week)

Live cattle: 78,277, (+4,335)

Lean hogs: 45,451, (+16,897)

Feeder cattle: 5,510, (+1,087)

Sources:, CFTC

And short positions haven't been paying off for funds, Water Street Solutions said.

"Wheat hasn't really gone anywhere the past four months," the ag-advisory group said.

"Funds are starting to cover their shorts."

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