Hopes grew of a slowdown in the selling which has driven soybean and soymeal futures to 14-month lows, after regulatory data showed hedge funds had already taken out a bigger-than-expected amount of short bets.
Managed money, a proxy for speculators, trimmed its net short position in futures and options in the top 13 US-traded agricultural commodities, from cocoa to cattle, by 7,988 contracts in the week to last Tuesday, analysis of data from the Commodity Futures Trading Commission regulator shows.
However, the slightly less positive swing on ag prices overall disguised a markedly more bearish take on Chicago soybean futures, in which managed money raised its net short by nearly 26,000 lots to 62,355 contracts.
That is the largest net short in 14 months.
Similarly, in soymeal too, hedge funds raised their net short - the extent to which short holdings, which profit when values fall, exceed long bets, which benefit when prices gain – to the largest since March last year.
The selling reflected a range of concerns, including ideas that US corn-sowing setbacks may seen even more area being seeded this year with soybeans, which can be later planted.
Speculators' net long in Chicago grains, May 23 (change on week)
Kansas wheat: 2,166 (-1,375)
Soyoil: -8,621, (-2,613)
Soymeal: -35,461, (-25,773)
Soybeans: -62,355 (-25,832)
Chicago wheat: -113,211, (+8,174)
Corn: -176,503, (+27,406)
Sources: Agrimoney.com, CFTC
The collapse in the real during the week was also - in boosting the local value of assets such as soybeans, which are traded internationally in dollars - said to have encouraged a surge in selling by Brazilian producers, with some talk of as much as 5m tonnes of the oilseed being priced on one day.
However, separate CFTC data showed the commercial position in soybean futures and options actually showed no great surge in short bets, and in fact saw an increased net long, up 26,600 lots at 30,000 contracts.
"Looking at commercial increase in long position, the funds outnumber producer selling," said Benson Quinn Commodities, saying that the overall CFTC data "may be important" for the soy market.
"Oversold technicals, fund short the largest in over a year and commercial net long looks to offer support" to prices this week, the broker said.
Chicago soybean futures for July, while setting a fresh 14-month low of $9.22 ¾ a bushel in early deals on Tuesday, recovered to $9.25 ¼ a bushel as of 05:00 local time (11:00 UK time), down just 0.1% on the day.
Soymeal futures for July recovered from a 14-month low of $301.10 a short ton to stand at $302.60 a short ton, a gain of 0.3% on the day.
Elsewhere in Chicago, the CFTC showed continued short-covering in corn, for which US weather threats have undermined somewhat the bearish case posed by strong world supplies of the grain.
Speculators' net longs in New York softs, May 23, (change on week)
Cotton: 95,904, (-9,187)
Raw sugar: -8,718, (+15,675)Arabica coffee: -15,834, (-2,789)
Cocoa: -28,795, (+8,087)Sources: Agrimoney.com, CFTC
However, Benson Quinn Commodities saw scope for further short covering, placing upward pressure on prices.
"The supportive feature remains the potential for additional short covering by the funds. They could be forced to cover more shorts."
In wheat too, a net short of 113,000 contracts, while eroded week on week, "big enough that additional short covering could be expected" on weather upsets.
Speculators' net long positions in Kansas City-traded hard red winter wheat, and Minneapolis spring wheat, "which have gotten bigger through the balance of [last] week, look pretty harmless".
Among soft commodities, managed money rebuilt its net long for a second successive week although, again, this disguised varying fortunes between contracts.
Speculators' net longs in Chicago livestock, May 23, (change on week)
Live cattle: 130,686, (+841)
Lean hogs: 48,750, (+15,465)
Feeder cattle: 16,839, (-91)
Sources: Agrimoney.com, CFTC
Indeed, cocoa futures soared 3% in early deals on Tuesday, after heavy rains in Ivory Coast raised fears for the mid-crop harvest, which began last month.
By contrast, a wave of short-covering buy hedge funds in sugar looks premature, given further softness in the sweetener, which on Tuesday fell below 15 cents a pound for the first time in 14 months, undermined by larger-than-expected output in Brazil, where weaker fuel prices have also undermined price prospects.
"The drop in prices lowers the price point at which sugar can leak into ethanol," said Tobin Gorey at Commonwealth Bank of Australia.
"That price point is already below 13.50 cents a pound, so if the market does need to lose some sugar, prices will need to fall some more."
In the Chicago-traded livestock complex, hedge funds raised their net long to 196,725 lots, the highest in nearly three years, led by a buying spree in lean hog futures and options.
Managed money net long in top 13 US-traded ags and (change on week)
May 23: -155,153, (+7,988)
May 16: -163,141, (-8,947)
May 9: -154,194, (+35,047)
May 2: -189,241, (+41,965)
Apr 25: -231,206, (-68,232)
Apr 18: -162,974, (-50,324)
Apr 11: -112,650, (-83,231)
Apr 4: -29,419, (-99,680)
Sources: Agrimoney.com, CFTC
"Summer hog futures have been bolstered… by robust demand for a number of key summer items," livestock experts at Steiner Consulting said, flagging a surge of one-third year on year in prices of pork bellies.
"Belly prices normally hold firm through June, and the recent gains coupled with tight inventories have contributed significantly to the overall pork cut-out.
"Pork trim prices also have been performing better and are expected to appreciate further given the very large spread between beef and pork trimmings."
However, the consultancy added that the release next month of key US Department of Agriculture hog data, "and the pace of exports, will likely start focus the mind on what is expected to be record pork supplies this fall and the price levels required to push all this pork through domestic and export channels".
By Mike Verdin