Hedge funds bet­ting on corn to rally

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM - Bloomberg News — The As­so­ci­ated Press

The glut of corn that’s been driv­ing down prices is fi­nally start­ing to ease, and hedge funds are bet­ting that will help spark a rally for the com­mod­ity.

U.S. corn in­ven­to­ries are ex­pected to drop be­fore the 2018 har­vest as farm­ers curb plant­ings and de­mand stays ro­bust, the Depart­ment of Agri­cul­ture said Fri­day. The in­ven­tory de­cline would be the first since 2013 and sig­nals that the four-year rout for prices could be over.

Money man­agers have stayed bullish on the grain for five straight weeks, the most pos­i­tive streak since July. Mid­west grow­ers are cut­ting acreage in fa­vor of other crops, in­clud­ing soy­beans. That’s help­ing to breathe life back into the corn mar­ket, es­pe­cially amid near-record pro­duc­tion from ethanol mak­ers.

“You can’t say de­mand’s been bad by any stretch,” said Fiona Boal, di­rec­tor of com­mod­ity re­search at Lon­don­based Ful­crum As­set Man­age­ment LLP.

The corn net-long po­si­tion, or the dif­fer­ence be­tween bets on a price in­crease and wa­gers on a de­cline, in­creased 8 per­cent to 92,216 fu­tures and op­tions con­tracts in the week ended Feb. 21, ac­cord­ing to U.S. Com­mod­ity Fu­tures Trad­ing Com­mis­sion data re­leased three days later. That’s the high­est since mid-July.

Amer­i­can re­serves will drop to 2.215 bil­lion bushels be­fore the 2018 har­vest, the USDA said Fri­day at its 93rd an­nual Agri­cul­tural Out­look Fo­rum in Ar­ling­ton, Va. That’s down from 2.32 bil­lion this sea­son. In­ven­to­ries are de­clin­ing as pro­duc­tion is forecast to fall 7.1 per­cent.

KUALA LUMPUR, Malaysia — Malaysian Prime Min­is­ter Na­jib Razak said Mon­day that oil com­pany Saudi Aramco will in­vest $7 bil­lion in an oil pro­cess­ing hub in Malaysia, mak­ing it the sin­gle largest in­vestor in the South­east Asian coun­try.

The an­nounce­ment came on the sec­ond day of a visit by Saudi King Sal­man, who is on a multi­na­tion tour to strengthen eco­nomic ties with Asia.

Na­jib said Aramco and Malaysia’s na­tional oil com­pany Petronas, which is lead­ing the project, will sign the agree­ment to­day.

“This is a sig­nif­i­cant in­vest­ment,” Na­jib told a news con­fer­ence af­ter meet­ing with the king. He said Aramco’s in­vest­ment is a “strong vote of confidence” in Malaysia’s econ­omy and that bi­lat­eral re­la­tions are at an “all-time high.”

The re­fin­ery com­plex is be­ing de­vel­oped for $27 bil­lion in Malaysia’s south­ern Jo­hor state bor­der­ing Sin­ga­pore and is sched­uled to be­gin op­er­at­ing in 2019. It in­cludes a re­fin­ery that will have the ca­pac­ity to process 300,000 bar­rels of oil a day.

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