Hedge funds are making their most bearish bet ever on Midwest crops that have been benefiting from perfect growing weather.
Good news for consumers — possibly falling prices for a bountiful harvest — and a shorting opportunities for those who believe crop yields will exceed government estimates, reports Bloomberg. According to the CFTC, combined positions across 11 products from corn to soybeans had a net-bearish holding of 208,561 contracts May 26, up from 107,376 a week before. Writes Bloomberg:
“We’re in an ideal growing and planting season,” Sameer Samana, a global strategist in St. Louis for Wells Fargo Investment Institute, which manages $1.6 trillion, said by phone May 28. “We have healthy inventories, and even though demand is growing, it’s not growing fast enough to get prices going in the opposite direction.”
What could go wrong? The weather. Too much rain in the MidWest, for example. The heat wave in India may kill wheat, tipping plenitude into a shortfall. Also: While global inventories are due to reach a new record, the ratio of stockpiles-to-consumption will still be lower than average.
Photo: Rosana Prada via Flickr.