Money managers increased their length in Chicago Board of Trade corn futures and options, as traders factor in tighter supply forecasts after a historic drought-ravaged U.S. summer crops, government data showed Friday.

Managed funds, including hedge funds, were net long 303,178 corn contracts, up 6% from the prior week, according to data from the Commodity Futures Trading Commission.

The net position is the difference between the number of long contracts, or bets that prices will rise, and short contracts, or bets that prices will fall.

Government crop forecasts confirming a historic drought slashed crop yields and will tighten global supplies made investors comfortable placing bets on corn prices rising.

Money managers increased their large net long position in soybeans as well. Money managers hold 234,206 long positions and just 3,661 short positions for a net long position of 230,545 contracts in the week ended Tuesday.

Money managers decreased their net long position in wheat to 77,104 contracts in the past week. They were net long 130,098 contracts, and short 52,994 last week.

In other markets, money managers were net long 31,809 contracts in live cattle futures, up 23% from the prior week.

Funds held a net long position in feeder-cattle futures, by a margin of just 172 contracts, after moving to a modest net short position of 290 contracts a week earlier.

In lean hogs, money managers reduced their net long position to 23,656 contracts. Funds were net long 23,958 last week.

Write to Andrew Johnson Jr at andrew.johnsonjr@dowjones.com

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(END) Dow Jones Newswires

August 17, 2012 16:15 ET (20:15 GMT)