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Why commodity trading is the comeback kid
Hedge funds continue to rush into commodities according to the Commitment of Traders report covering the week of February 18. The bullish bets on 24 US traded commodities jumped by 15 percent to 1,659,000 contracts of futures and options. This the seventh weekly increase in a row has driven the exposure to the highest since April 2011 and an unprecedented 23 out of 24 commodities tracked in this were bought.
Source: CFTC, Bloomberg and Saxo Bank
- Gold net-long jumped by 31 percent following the recent break above USD 1,300/ounce.
- WTI crude oil net-long rose and is now just 2,237 contracts below the record from last July.
- Soybeans traders added another 10 percent resulting in the net-long reaching the highest since September 2012.
- Arabica coffee longs jumped to the highest since October 2011 as the price began to take off in response to the drought in Brazil.
Many other interesting changes during a week which again signaled the potential return of commodities as an investment class worth taking a closer look at. However a word of warning; many of the these current bullish moves are driven by the adverse weather in the US and Brazil. There's the imminent danger of a correction once that situation stabilises.
01:43 minutes
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