Chicago-traded soybean futures reached three-week highs May 21 as China appears to be coming back to the U.S. market after a state-wide boycott, but speculative investors seem to be taking a cautious approach.

The trade tension between the United States and China, the world’s leading buyer of soybeans, has weighed heavily on agriculture markets ever since Beijing threatened tariffs nearly two months ago.

The world’s two largest economies recently agreed to drop tariff threats while they lay the framework for a broader trade deal. This was followed last week by word that Beijing had given the OK for Chinese soybean buyers to purchase U.S. beans again.

In the week ended May 22, hedge funds and other money managers cut their net long position in CBOT soybean futures and options to 98,228 contracts from 108,061 in the prior week, according to data from the U.S. Commodity Futures Trading Commission.

This is notably less bullish than the approximate range of 170,000 to 210,000 futures and options contracts that the funds had maintained all throughout March and April.

And in the days since May 22, commodity funds only added a few thousand futures and options contracts on the net to their long position, according to trade sources.

This may reflect investors’ need to see more measurable progress between the United States and China, especially pertaining to soybean trade, before they would re-establish a more optimistic stance.

Speculators continued buying soybean oil and selling soybean meal in the week ended May 22, but the net activity was relatively light and the two positions remain heavily lopsided.

Money managers trimmed bullish bets in soybean meal to 115,296 futures and options contracts from 121,532 in the week before. They also cut their net short position in soybean oil to 47,249 futures and options contracts from 55,442.

Trade estimates suggest that commodity funds were net buyers of soymeal and net sellers of soyoil over the last three sessions.

In corn, the picture is brighter.

In the week ended May 22, money managers expanded their bullish stance in CBOT corn futures and options to 199,970 contracts from 191,672 in the previous week. They are estimated to have added a few thousand more contracts to their corn long in the sessions since, driven both by strength in wheat and poor planting conditions in parts of the Upper Midwest.

Hot temperatures across the U.S. Midwest and Plains over the weekend was seen as favourable for early growth of corn and soybeans, but traders are watching for the possibility of above-average temperatures lingering into early June.

The heat is also expected to help ripen the Plains’ hard red winter wheat, which lags normal progress by a couple of weeks. But hot and dry weather continues to threaten some key wheat-exporting countries such as Canada, Australia, and Russia.

Through May 22, money managers trimmed their net short position in CBOT wheat futures and options to 1,685 contracts from 5,522 in the previous week. By the close of trade that week, commodity funds were estimated to have flipped back to a bullish stance on soft red winter wheat.

Funds also extended their net long in K.C. wheat futures and options to 46,323 contracts from 44,190 a week earlier. They also re-established a bullish view in Minneapolis wheat futures and options of 2,379 contracts compared with last week’s net short of 558 contracts.

Karen Braun is a Reuters market analyst. The views expressed here are her own.