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Funds Reduce Net-Short Positions as Demand Picture Improves

Speculative investors reduced their net-short positions in corn by 22% and in soybeans by 41% in the week that ended on December 1, the Commodity Futures Trading Commission said in a report today.

Money managers were net-short 83,748 contracts at the end of last week, down from the 107,894 they had seven days earlier as many liquidated bets that prices would fall. Specs were net-short by 29,772 soybean contracts, well below the 50,840 they had a week earlier, according to the CFTC.

The number of short positions, or bets that prices would fall, increased in prior weeks after Argentinian voters elected a candidate who vowed to cut export taxes, adding to worries about slack demand for U.S. agricultural products.

Export taxes in Argentina will in fact be lowered, but not by as much as some feared, and a little demand for U.S. corn and beans crept back into the market last week, which led investors to buy back their short contracts and eliminate their positions, said Craig Turner, a senior broker at Daniels Trading in Chicago.

“Argentina isn’t going to completely flood the market (with grain and oilseeds), and we’re starting to see some export demand from China – not only for U.S. products, but South America has also had some good demand,” Turner said. “Harvest is done, so farmers who were selling beans have sold and the rest is going into storage, so now we’re seeing some short-covering.”

Fund managers were net-short by 77,504 soft-red winter wheat contracts, an increase of 66% from the prior week, the agency said. Hard-red winter investors were net-short by 23,792 contracts, little changed from last week.

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