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Speculators in the last two weeks of 2021 staged their largest soybean buying streak in well over a year as dry South American weather sent Chicago futures to five-month highs.

That follows countless weeks of perhaps forced bullishness as investors increased their appetite for corn and soybean meal.

Forecasts show dry weather persisting for soybeans and corn in Argentina and southern Brazil over the next couple of weeks, though traders are weighing those crop risks against what has been lackluster export demand for U.S. products.

In the week ended Dec. 28, money managers increased their net long in CBOT soybean futures and options to 98,080 contracts from 72,924 a week earlier and 40,975 two weeks earlier. That is based on data published last Monday by the U.S. Commodity Futures Trading Commission.

That marked funds’ most bullish soybean view since mid-June, and the entrance of new longs was most prominent in the latest two weeks.

Money managers were much more enthusiastic at the end of 2020 with a soybean net long close to 200,000 futures and options contracts.

But they are more excited about corn than a year ago as their net long stood at 373,345 futures and options contracts as of Dec 28 versus 332,045 exactly a year earlier. The latest stance is funds’ most optimistic since late April and it represented a gain of about 13,000 contracts on the week.

Most-active CBOT corn futures on Dec. 28 hit a six-month high of $6.17-3/4 per bushel. That was up nearly 25% from a year ago.

Investors are increasingly interested in fresh outlooks for South American crops, but the main upcoming attraction is the U.S. Department of Agriculture’s supply and demand, crop production, quarterly stocks and winter wheat acreage updates coming on Jan. 12. This data dump may set the market tone for the coming weeks and months.

Weather in Argentina has changed drastically since mid-December, with dryness threatening corn crops as they enter critical development stages, analysts said.

Traders are waiting for early soybean harvest results in Brazil to gauge if favorable conditions in more northern regions offset expected losses in the south.

Wheat is the only grain in which speculators hold pessimistic views. The most-active contract shed nearly 2% through Dec. 28, though money managers expanded their net short by less than 800 to 11,773 futures and options contracts.(Reuters)

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