Investors increased wagers on a commodity rally by the most in eight months as signs of a U.S. economic recovery bolstered the outlook for demand and drove rallies in crude oil, cotton, copper and gold.
Hedge funds and other large speculators raised net-long positions across 18 U.S. futures and options in the week ended March 12 by 30% to 528,680 contracts, the biggest gain since July and up from a four-year low the previous week, U.S. Commodity Futures Trading Commission data show. Money managers raised bullish bets on corn by 39%, cotton holdings were the highest since 2010, and gold wagers increased 9%.
Open interest in commodities rose 2.8% in the first half of March, heading for a third monthly gain, and the Standard & Poor’s GSCI Spot Index of 24 raw materials erased its 2013 losses. U.S. retail sales climbed twice as much as forecast in February, the government said March 13. In the four weeks to March 9, the average number of Americans filing for jobless benefits fell to the lowest since March 2008. The U.S., the largest economy, is the top consumer of corn and oil and the second-biggest metals user.
“People are accepting the fact that we have a growing economy, and there’s confirmation of that from the economic data,” said Sal Gilbertie, who helps manage $69 million of assets as president and chief investment officer of Teucrium Trading LLC in Santa Fe, New Mexico. “It gives people a reason to believe that there’s going to be sustained economic demand for base commodities.”
The S&P GSCI gauge has gained 0.5% this year after being down 1% on March 4. The MSCI All-Country World Index of equities climbed 5.6%, while the dollar advanced 3.7% against a basket of six trading partners. Treasuries lost 0.9%, a Bank of America Corp. index shows.
The euro fell today to its lowest level this year, sending 17 of the raw materials tracked by the GSCI lower, after euro- area finance ministers reached an agreement on March 16 forcing depositors in Cypriot banks to share the cost of the latest euro-zone bailout.
First-time U.S. jobless claims fell 10,000 to 332,000 in the week ended March 9, the fewest since mid-January, the Labor Department said March 14. Output at factories, mines and utilities climbed 0.7%, the most in three months, exceeding the median projection in a Bloomberg survey of economists, the Federal Reserve said on March 15.