commodity investing 101

commodity investing 101

January 3rd, 2017

Hedge funds approached the end of 2016 on a bearish note in agricultural commodities, cutting bets on price rises for a fourth successive week, as they stretched to a record a selling spree in softs such as cocoa and coffee.

Managed money, a proxy for speculators, cut its net long position in futures and options in the top 13 US-traded agricultural commodities, from corn to sugar, by 37,457 contracts in the week to last Tuesday, analysis of data from the Commodity Futures Trading Commission regulator shows.

The selldown reduced the net long – the extent to which long bets, which profit when values rise, exceed short holdings, which benefit when prices fall – to the lowest in two months.

And it included bearish positioning in both grains, in which hedge funds returned to a net short position, as well as in New York-traded soft commodities, which also include cotton and sugar.

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commodity investing 101

commodity investing 101

November 21st, 2016

Hedge funds turned bearish on agricultural commodities at the fastest rate in nine months, provoking hopes in grains that selling pressure may be spent for now – but spurring worries in sugar of “much lower” prices.

Managed money, a proxy for speculators, lifted its net long position in futures and options in the top 13 US-traded agricultural commodities, from corn to sugar, by 151,096 contracts in the week to last Tuesday, analysis of data from the Commodity Futures Trading Commission regulator shows.

That represented the biggest reduction since February in the net long – the extent to which long bets, which profit when values rise, exceed short holdings, which benefit when prices fall.

And it came in a week in which ag bulls suffered two notable blow – the first from the rise in the dollar, following the election of Donald Trump as US president, and the second from larger-than-expected official estimates for US corn and soybean crops.

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commodity investing 101

commodity investing 101

June 6th, 2016

Speculators lifted bullish positioning on agricultural commodities to the highest in nearly two years, as algorithmic funds flooded in, into sugar at least, – while coffee and wheat caught out investors making bearish bets.

Managed money, a proxy for speculators, raised by more than 64,000 contracts its net long position in futures and options in the main 13 US-traded agricultural commodities in the week to last Tuesday, according to data from the Commodity Futures Trading Commission (CFTC) regulator.

The increase took the net long – the extent to which long positions, which benefit when prices rise, outnumber short bets, which profit when values fall – to 681,515 contracts, the highest since June 2014.

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soybean futures brokers

soybean futures brokers

May 31st, 2016

Can soybean futures regain $11 a bushel, for the first time since September 2014?

They weren’t quite knocking on the door in early deals in Chicago, but were well up the garden path, hitting $10.96 a bushel, for the July contract, before easing back to $10.89 ¼ a bushel as of 08:35 UK time (03:00 Chicago time), a gain of 0.3% on the day.

It may have helped that risk assets were broadly putting on a firm performance as May headed for a close, with Shanghai shares adding 3.0% and Tokyo stocks closing up 3.0%, while oil futures made some headway too, particularly WTI crude, which gained 0.7% to $49.68 a barrel.

But the key reason cited for strength in soybeans was, as ever, worries over the rain-ravaged crop in Argentina, the third biggest exporter of the oilseed, and the top shipper of the processing products, soymeal and soyoil.

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crude oil futures news

crude oil futures news

October 30th, 2015

Crude oil futures rose near two-week highs on Friday, helped by a weaker U.S. dollar, although expectations for a U.S. rate hike before the year-end limited gains.

U.S. crude futures for December delivery were last at $46.25 a barrel, up 0.40% for the day.

On the ICE Futures Exchange in London, the December Brent contract were up 0.78% at $49.19 a barrel.

The dollar came under pressure after the Commerce Department reported on Thursday that U.S. gross domestic product grew at an annual rate of 1.5% in the three months to September, missing expectations for growth of 1.6%.

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sugar futures brokers

sugar futures brokers

October 26th, 2015

Morgan Stanley restated an upbeat call on corn, soyoil and sugar, based largely on expectations for importer demand, despite the revival in the dollar which will make the commodities more expensive for buyers in other currencies.

The bank acknowledged that, for corn, “near-term weakness” in US export sales may be “exacerbated” by the latest revival in the dollar, spurred by Chinese and eurozone monetary policy moves last week.

US export commitments for corn had, as of October 15, reached 11.88m tonnes for 2015-16, a drop of 35% year on year, according to US Department of Agriculture data.

However, market weakness would not last for ever, with the prospect of a decline in Brazilian shipments to send demand back the way of the US.

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commodity investing 101

commodity investing 101

October 5th, 2015

Commodity investing funds undertook a sharp wave of short-covering as pessimism over agricultural commodity prices waned, particularly in sugar, in which they turned more positive on prospects at the fastest pace in 15 months.

Managed money, a proxy for speculators, lifted its net long position in futures and options in the top 13 US-traded agricultural commodities, from corn to cotton, by 100,285 contracts in the week to last Tuesday, analysis of data from the Commodity Futures Trading Commission regulator shows.

The shift took the net long – the extent to which long bets, which profit when values rise, exceed short holdings, which benefit when prices fall – to 125,025 contracts.

And it was fuelled by a cut in short positions, of more than 90,000 lots, amid recovering markets for many agricultural commodities, with only cattle and cocoa among main contracts showing losses during the week.

The closure of short positions was evident in a cut to 1.38m lots, from 1.42m contracts, in speculators’ open interest – the total number of live contracts they hold.

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cocoa options

cocoa options

September 30th 2015

Cocoa futures prices will rise as production in the Ivory Coast, world’s largest grower, falls back, Ecobank said.

The Togo-based bank forecast falling cocoa outputs in the Ivory Coast, as well as Nigeria and Cameroon, while the outlook for second-largest grower Ghana is “clouded by uncertainty”.

The four West African countries account for over 70% of the world’s cocoa production between them.

“With global demand recovering and expectations of a global deficit this season, we expect prices to strengthen further,” Ecobank said, noting the potential for price spikes ahead of the new season starting in October, as farmers hold back beans in expectation of higher fixed prices coming season.

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commodity investing 101

commodity investing 101

August 5th, 2015

Commodity hedge funds, having been bloodied by buying grains as the market tumbled, followed up with widespread selling in ags, turning more bearish on soft commodities and livestock as well as the likes of corn and wheat.

Managed money, a proxy for speculators, slashed its net long position in futures and options in the top 13 US-traded agricultural commodities, from cotton to cattle, by nearly 135,000 contracts in the week to last Tuesday, according to data from the Commodity Futures Trading Commission regulator.

The cut in the net long – the extent to which long positions, which profit when values rise, exceed short bets, which benefit when prices fall – was the second largest over the past two years.

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commodity brokers

commodity brokers

October 20th, 2014

Commodity Investing – Plunging oil prices spurred hedge funds to cut bullish wagers by the most in six weeks, losing confidence in the willingness of producers to constrict supply.

Money managers cut net-long positions in West Texas Intermediate by 8.1 percent in the week ended Oct. 14. Short positions jumped to the highest level in 22 months, U.S. Commodity Futures Trading Commission data show.

WTI tumbled 8.8 percent this month as U.S. production expanded to a 29-year high. That added to signs of a global supply glut just as the International Energy Agency cut its forecast for demand growth. Crude is now trading in a bear market, underpinned by speculation that OPEC members are favoring market share over prices.

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