Agricultural Futures: "Hedge funds cover ag shorts en masse..."

They've fallen into my trap.*

From Agrimoney:

Hedge funds threw in the towel on short positions in agricultural commodities at one of the fastest paces on record, in many cases realising losses – although ironically raising questions about market strength to come.

Managed money, a proxy for speculators, turned from a net short position in the main US-traded ags of 213,000 contracts - the second largest in history – to a net long of some 34,000 lots in week to last Tuesday, according to data from the Commodity Futures Trading Commission (CFTC) regulator.

This hefty swing bullish in positioning of 247,000 lots was the third biggest on records going back to 2006, and was fuelled by a cocktail of factors, besides a less downbeat view of investors towards commodities overall, a reassessment which has seen the CRB index rebound 8% so far this month.

Some ags have gained particular strength from factors such as a rebounding real, which boosts the dollar value of commodities such as coffee and sugar in which Brazil is particularly important, and concerns over US Plains dryness which have raised concerns over winter crops.

Shorts closed – at a cost

Indeed, hedge funds cut their net short in Kansas City-traded hard red winter wheat, the type grown in the US Plains, by more than 11,000 contracts, the biggest swing bullish for the contract in nearly six years.

In Chicago soft red winter wheat too, the speculator's favourite, they cut their net short position heavily, by nearly 25,000 contracts.

Soybeans attracted a particularly dramatic wave of short covering, of nearly 65,000 contracts, driving managed money back into a net long – meaning that long positions, which benefit when prices rise, outnumber short bets, which profit when values fall....MORE

*When I think I've set a trap I have to consciously remind myself of General Custer's comment as he rode into the valley of the Little Big Horn, variously reported. Here's Time's version:

"Hurrah, boys,we've got them!,  We'll finish them up and then go home."

Another version has him saying "We've got them where we want them."

Corn    369-2 up 2-2

Wheat  471-2 up 8-2 

So much covering, so little movement.