Hedge Funds Buying Food
Commodities: Hedge funds raising Bullish bets most since August
Hedge funds increased Bullish bets on commodities by the most since August as evidence that China rebound and growth outweighs concern that US lawmakers are still “stalemate” over automatic spending cuts and tax rises.
Speculators and money managers increased net-Long positions across 18 US futures and options by 9.8% to 929,588 contracts in the week ended 27 November, the biggest gain since 21 August US Commodity Futures Trading Commission data show.
Gold holdings reached a 6-wk high, and wagers on a Wheat rally climbed the most since June. Cattle bets more than doubled.
The Standard & Poor’s GSCI Spot Index of 24 raw materials rose 1.9% in November, the 1st monthly gainer since August.
The world economy is in its best shape in 18 months because of the growth acceleration in China, the biggest consumer of everything from Cotton to copper to Coal, according to the Bloomberg Global Poll of 862 investors last week.
The S&P GSCI rose less than 0.1% last week, led by gains in industrial metals and agriculture.
A measure of net-longs for 11 US farm goods rose 9.1%, the biggest gain since 23 October, CFTC data show.
The Standard & Poor’s GSCI Agriculture Index of 8 farm products jumped 0.8% last week, the 2nd consecutive increase.
Bullish bets on Cattle more than doubled to the highest since 18 September. Futures jumped to a record $1.32925 lb on 23 November in Chicago trading on shrinking supplies of Beef and rising demand. The US Cattle herd was the smallest since at least Y 1973 as of 1 July as ranchers culled animals during the worst drought since Y 1956.
Corn holdings rose 2.7% to the highest since 23 October, and wagers on a wheat rally surged 35%, the biggest increase since 26 June CFTC data show.
Wheat futures rose 32% this year in Chicago as dry weather cut global production to a 5-yr low.
As the global economy continues to expand next year commodities should see a profitable year.
The MSCI All-Country World Index of equities advanced 0.9% and the USD fell 0.1% against a basket of 6 trading partners.
US Treasuries returned 0.4%, a Bank of America Corp. index shows. The GSCI gauge rose 0.4% Monday.
The US economy, the world’s biggest, expanded 2.7% in Q-3, more than economists forecast, according to US Commerce Department data on 29 November.
The S&P/Case-Shiller index of property values in 20 US cities showed that home prices in the 12 months ended September advanced by the most since July 2010.
Confidence in China’s economy rose to the highest in more than a year amid optimism that the new leadership headed by Xi Jinping will improve the financial climate, according to an investor poll. Manufacturing in the country rose to the highest level in 7 months in November, the National Bureau of Statistics said on 1 December.
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Heffernan Capital Management
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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.
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