Funds suspended corn sales and expanded long positions in soybeans

Speculators made unprecedented moves in the 2025 Chicago corn market as a combination of geopolitical uncertainty and supply trends triggered a sell-off, turning a highly bullish market into a bear market.

June officially marks the start of the summer corn growing season in the U.S., a period in which investors can quickly turn their attention to weather forecasts and crop conditions, regardless of the broader fundamental picture.

This creates both bearish and bullish sentiment for the near term.

CORN SCENARIOS

For the week ending May 27, money managers reduced their net short position in CBOT corn futures and options to 100,760 contracts, down less than 3,000 for the week.

While this new position is not historically very bearish, it follows a spectacular sell-off. From late February to mid-May, money managers were net sellers of more than 420,000 corn contracts, equivalent to 2.1 billion bushels and the most in an 11-week period.

The most-active CBOT corn futures contract fell 10.5% over the period, and the new December corn crop fell more than 6%. December corn closed at $4.38-1/2 a bushel on Friday, a five-year low for that date.

Trade fears have been swirling for months, and confusion grew last week. A U.S. trade court ruled President Donald Trump’s massive trade tariffs unconstitutional, though the ruling was stayed the next day.

On the fundamental front, traders are pricing in strong U.S. corn demand and expecting supplies to expand.

Last month, the USDA forecast that U.S. corn ending stocks would be up 27% in 2025-26 from a year earlier, up from the 14% increase projected in October.

However, 2025-26 stocks are expected to be 21% lower than the October forecast, leaving some room for a positive scenario if corn yields disappoint.

Thus, speculators are likely to react if there is any such risk to returns. Take 2023, for example, which has seen very similar stock moves as 2025, especially in terms of maturities.

As of June 2023, U.S. corn ending stocks in 2023-24 were projected to be up 55% from a year ago. However, funds dipped into bull territory twice that summer on weather fears, although the U.S. corn crop ended up producing a record yield.

Speculators turned short in August 2023 and did not return to bullish positions until November 2024, so any upcoming bullish opportunities could prove short-lived if U.S. weather concerns do not persist.

AT A GLANCE

In the week ended May 27, money managers expanded their net long positions in CBOT soybean futures and options to 36,697 contracts from 12,654 the week before. That was their seventh straight week as soybean bulls.

Funds reduced their net long positions in CBOT soybean oil futures and options to 53,988 contracts from 57,309 the week before. They also cut their net short positions in soybean meal to 93,785 contracts from a record 107,466 a week ago.

Money managers cut their net short positions in CBOT wheat futures and options to 101,226 contracts through May 27 from 108,893 a week ago. They also cut their net short positions in Minneapolis wheat to 30,518 contracts from a record 34,140 a week ago.

Funds’ net short positions in Kansas City wheat futures and options were 79,361 contracts through May 27, close to the all-time record set two weeks earlier.

From Wednesday to Friday, the most active futures on the CBOT were: corn -3.4%, soybeans -2%, wheat +1%, soybean oil -5.4%, soybean meal unchanged.

Traders will be watching any developments on the tariff or biofuel front this week, as well as U.S. weather forecasts and crop conditions. On Monday, the U.S. Department of Agriculture will release its first-ever U.S. soybean crop health rating.

Karen Brown is a Reuters market analyst. The views expressed above are her own.