Commodities Players place Bullish bets on commodities, most since September
Hedge funds increased commodity bets to the highest in almost 5 months on signs that a rescue plan for Greece and faster US growth will buoy demand as supplies shrink for everything from Soybean to Copper.
Money managers boosted net-long position across 18 US futures and options by 2.9% to 956,313 contracts in the week ended 14 February, the most since 20 September, government data show.
Soybean wagers rose 29% to a f5-month high. Silver holdings rose for a 7th straight week, the longest advance in almost 3 yrs.
The Standard & Poor's GSCI Spot Index of 24 commodities reached a 6-month high on 17 February as EuroArea leaders expressed confidence that an agreement on a Greek bailout can be reached.
Reports last week on US housing and manufacturing beat analysts' forecasts, and claims for jobless benefits dropped to a 4-yr low. Investments in raw-material futures rose 13% this year, exchange data show.
The S&P GSCI gauge rose 2.2% last week. The MSCI index of equities ended the week 1.5% higher, and the yield on 10-yr US Treasuries rose 1.6 basis points, or 0.016 percentage point.
Sixteen of the raw materials tracked by S&P advanced last week, led by Cocoa's 8.5% gainer. Nat Gas climbed 8.4%, and Cattle prices rose 3.2%, tapping a record.
Supplies of Copper will trail demand by 376,000 metric tons this year, according to a report on 16 February. Consumption will outpace production for Tin and Palladium, the report said. Copper for 3-month delivery in London gained 1.6% to $8,302 a ton at 12:38 p.m. in Shanghai.
Shortages are also forecast for Soybean, Coffee and Cocoa, are forecast in its latest monthly outlook report in January.
Bets on higher Crude Oil prices rose 14% to 233,889 contracts, the government said. That's the highest since May. Futures in New York climbed to 9-month high on 17 February as improving growth prospects bolstered the outlook for fuel demand. The commodity has also gained on concern that shipments will be disrupted by tension between Iran and the West over the Country's nuclear program.
Soybean holdings rose by 18,186 contracts to 81,042, the highest since 20 September. US exporters made the biggest 1-day sale ever to China, the World's top consumer, the government said on 17 February. Prices rose to the highest in almost 5 months.
Last week, U.S. and Chinese officials signed a five-year accord to cooperate on agricultural production and trade and food security as Vice President Xi Jinping visited Iowa.
Soybean prices have risen 6.2% in February as dry weather threatened crops in Brazil and Argentina, boosting demand prospects for US supplies.
A measure of 11 US farm goods showed speculators lowered Bullish bets in agricultural commodities by 0.4% to 453,637 contracts, CFTC data show. Declines were led by Cotton. The gauge is still up 66% this yr.
Bets on higher Cattle prices climbed 2.2% to 88,091 contracts, the highest since mid-November. Futures advanced to a record on 17 February as rising demand for US Beef tightens supply.
The US Cattle herd as of 1 January was the smallest for that date since Y 1952, and Beef exports surged 21% in Y 2011, government data show. Global food prices rose in January by the most in 11 months, according to the United Nations.
The market wants to go up, and there is a good start even if the conviction is low, the macro headwinds may soon turn to tailwinds for the commodity market. Time will tell. Stay tuned...
Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels. www.livetradingnews.com