Hedge funds were not going to be caught making the same mistake twice in agricultural commodities.
Last time, in the week to December 5, they were shown too quick to take profits on short contracts in the top 13 US-traded ags – returning to a net long in just ahead of fresh price declines.
However, latest Commodity Futures Trading Commission data, for the week to December 12, show managed money gorging on bearish bets – raising their net short in futures and options combined by more than 250,000 contracts, the most on records going back to 2006
That drove them back into a net short in ags, of some 170,000 contracts, the most in five months.
Below are some of the main drivers of that selling splurge, which looks like having proved a broadly profitable one, with the Bcom agricultural commodity sub-index down 3.7% over the week to a record low.
The overall net short for the complex, including soybeans, soyoil and soymeal as well as the main grain contracts, rose to six-month high of 285,803 lots, thanks to net selling of 115,903 lots during the week.
This included, for Chicago soft red winter wheat, a record selldown (on data going back to 2006), of 38,871 contracts, taking the net short to 157,652 lots. (That is narrowly short of record of 162,327 contracts, set in April.)
For Kansas City hard red winter wheat, speculators raised their net short to a record 31,139 contracts.
Chicago-traded soybeans suffered their largest selldown in nine months, of 33,379 contracts.
A record selldown in the main New York-traded soft commodities (arabica coffee, cocoa, cotton, raw sugar) of 109,277 contracts, returning hedge funds to a net short in the complex.
Cotton bucked the trend, with net buying of 7,101, taking the total net long to 89,510 lots, a six-month high.
For cocoa, net selling of 16,962 contracts was the largest in 11 years, and the second largest on data going back to 2006.
Net selling of 82,966 contracts in raw sugar was record large, driving speculators back into a net short in the contract.
In arabica coffee, net selling of 16,450 contracts was the largest in two years and the second largest on data going back to 2006. The resulting net short, of 52,246 contracts, was a record high.
In Chicago-traded livestock futures and options, managed money cut its net long by 27,238 contracts, the most since the record of 28,706 set in January 2013, and the second largest on record.
This was down largely to selling in live cattle, in which hedge funds cut their net long by 17,262 contracts, the most in two years.