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Grain and Oilseed Rally Sharply

David Becker
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Bean oil prices gapped higher on Monday along with crude oil prices as Russian troops moved into the Ukrainian peninsula of Crimea. Secretary of State Kerry traveled to Ukraine to reiterate its support for the Ukrainian government. Hedge funds traders drastically reduced their short position in futures and options according to the latest industry report.

The removal of the Ukrainian President pushed the country into chaos, which lead Russia to move quickly to secure the port city of Crimea. The escalation increased volatility and helped boost commodity prices. Bean oil prices moved higher along with the entire bean process, despite weaker than expected manufacturing data released on Monday in China.

China’s HSBC manufacturing PMI fell to a seven-month low of 48.5 in February from 49.5 in January, while the official reading slipped to 50.2 from 50.5. Although the official reading is still in expansion territory, the trajectory of the decline is negative.

Hedge fund traders continued to exit short position in futures an option according to the latest commitment of traders report released for the date February 25, 2014. According to the CFTC, managed money reduced short futures and options position in soy bean oil by 13K contracts. The decline in the latest week was 16% of the short option interest held by managed money. Managed money increased long position in futures and options by 2K contracts.

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