Column: Funds boost confidence in CBOT soybean oil amid global vegetable oil strength – Braun

NAPERVILLE, Illinois, Oct 23 (Reuters) – Speculators staged their biggest Chicago soybean oil buying spree in just over a year last week, shifting their bullish bets on oil from soybeans beyond those on soybean meal for the first time since June.

Through Friday, CBOT soybean oil futures had risen 16% this month and Malaysian palm oil futures had risen 20% as supply concerns worldwide in persistent vegetable oil.

In the week ended Oct. 18, CBOT soybean oil rose 5% and fund managers added nearly 14,000 futures and options to their net long position, according to data from the US. Commodity Futures Trading Commission.

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This net long reached 74,974 futures and options, the largest since May and above the net long soybean meal fund of 70,797 contracts, a slight gain on the week. Fund managers have been bullish on oil versus flour for two-thirds of the past two years.

Net Managed Money Position in CBOT Soybean Oil Futures and Options

Soybean oil and soybean meal futures have seen gains of 4% over the past three sessions, taking soybean oil above 70 cents per pound. However, open interest lags recent years as of October 18 with soybean oil at an eight-year low for the week and soybean meal at a nine-year low.

U.S. corn and soybean crops in 2022 were below initial expectations of a combined 800 million bushels (5%), keeping speculators on the long side of these markets for a third straight year.

Open interest for corn futures and options is 1% higher than a year ago and for soybeans is down 12%, although open interest is significantly lower than on the same date in 2020, in particular for soybeans. Raw shorts remain close to minimum levels.

The week ended Oct. 18 contained the US Department of Agriculture’s Oct. 12 report, which was positive for soybean bulls but neutral to negative for corn. Fund managers during this period reduced their net long position in CBOT corn futures and options from about 13,000 to 254,261 contracts.

The funds’ net long position in corn is larger than in the same weeks in 2021 and 2020, which were both around 220,000 contracts.

Fund managers through Oct. 18 ended a four-week selling streak in CBOT soybean futures and options, adding just over 1,000 contracts to their net long, which hit 66 862 contracts. This position fell below 20,000 contracts in the same week a year ago, but the comparable net long position of around 232,000 contracts in 2020 was near the top of the funds’ last bull run.

CBOT wheat futures fell nearly 6% in the week ended Oct. 18 after a more than three-month high, although low open interest rates continue to limit fund movements . Fund managers cut nearly 2,600 contracts from their CBOT wheat net shorts, which fell to 22,051 futures and options contracts. The sale had been estimated at more than 16,000 futures.

CBOT wheat flirted with one-month lows on Friday as trade sentiment towards the Black Sea grains deal swings between hot and cold. Ukraine’s president on Friday accused Russia of intentionally withholding 150 Ukrainian grain ships, and Moscow appears to be reluctant to extend the grain deal next month as Russian wishes go unfulfilled. nL1N31M1SD nL8N31L5JP

On the supply side, the pace of wheat planting in Ukraine and Russia has been below normal, and US farmers are planting their wheat in historically dry soils. In the Southern Hemisphere, drought has hit the Argentine crop and heavy rains are raising quality concerns in Australia.

Karen Braun is a market analyst at Reuters. The opinions expressed above are his own.

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Editing by Robert Birsel

Our standards: The Thomson Reuters Trust Principles.

The opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and non-partisanship by principles of trust.

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