News Column

Coffee to soybean wagers climb on Brazilian drought

February 12, 2014





Hedge funds raised bullish commodity bets to a 15-week high after a drought in Brazil threatened crops from coffee to soybeans.

The net-long position across 18 US-traded commodities climbed 15 percent to 900,330 futures and options in the week ended Feb. 4, the biggest gain since August, US Commodity Futures Trading Commission data show.

Investors turned bullish on arabica coffee for the first time since July 2012 and soybean wagers rose by the most in almost three months. Brazil is the biggest exporter of both crops, Bloomberg wrote.

The Standard & Poor's GSCI Agriculture Index of eight commodities rose 3.3 percent last week, reaching an eight-week high Feb. 6.

In Brazil, also the top sugar grower, the driest January since 1954 drained dams and scorched plants. Extreme global weather also is threatening other crops with too much rain hampering Indonesia's cocoa harvest and freezing temperatures damaging US wheat.

"Agriculture is probably the best hope for a decent commodity run this year," said Peter Sorrentino, who helps manage $4.4 billion at Huntington Asset Advisors in Cincinnati.

These weather issues will definitely have a decided positive influence on prices.

The S&P GSCI Spot Index of 24 raw materials gained 2.1 percent last week. The MSCI All-Country World index of equities rose 0.8 percent, while the Bloomberg Treasury Bond Index slid 0.1 percent.


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Source: Iran Daily


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