Hedge funds betting on corn to rally

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.

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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.