(Bloomberg News) Funds cut bets on rising prices for wheat, cocoa and other food commodities on easing concern about shortages and on speculation higher costs will curb demand.

Speculators reduced their net-long position in wheat by 54 percent to 11,206 futures and options contracts on the Chicago Board of Trade in the week ended May 17, data from the U.S. Commodity Futures Trading Commission show. The position in cocoa slumped 39 percent, in lean hogs 33 percent, in coffee 31 percent and in soybean oil 15 percent.

The Standard & Poor's GSCI Agriculture Index rallied 7.7 percent since May 13 as European farmers contend with the driest growing conditions in more than three decades, drought threatens crops in China and flooding and heat ruin harvests in the U.S. The gauge of eight commodities is 76 percent higher than a year ago and the United Nations said May 5 that global food prices rose to near a record last month, adding pressure to inflation that is accelerating from Beijing to Brasilia.

"Investors got a bit jittery whether the upside could be sustained after a good run over the past couple of weeks," said Abah Ofon, an analyst at Standard Chartered Plc in Singapore. "Fundamentals are supportive of the markets though. There are supply risks coming from weather in Europe and the U.S."

The net-long position of funds across 18 U.S. commodity futures declined 11 percent to 1.09 million contracts, the lowest since July, CFTC data show. Holdings in sugar, live cattle, soybean meal, soybeans and corn also retreated.

Output Forecasts Cut

The decline in bullish bets on wheat came before forecasts for lower-than-expected output in France and Germany on May 18. Prices have also rallied since then as wet weather delayed U.S. planting. The next report, with data through May 24, may show a rebound in the net-long position, said Tim Hannagan, a grain- market analyst for PFG Best Inc. in Chicago.

Wheat for July delivery advanced 0.5 percent to $8.1075 a bushel as of 1:48 a.m. in Chicago.

The decline in the lean-hog position may reflect concern that higher prices are curbing demand, said Dan Vaught, the owner of Vaught Futures Insights in Altus, Arkansas. Wholesale pork on May 16 climbed to 98.31 cents a pound, the highest since at least October 1997, U.S. Department of Agriculture data show.

"It simply goes back to the current industry mindset that the recent run-up in prices has done a great deal to strangle domestic demand," Vaught said. The jump in fuel costs "doesn't leave a lot of room in people's budgets for a lot of items, particularly some of your higher-priced meat cuts," he said.