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 percent 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 percent, cotton holdings were the highest since 2010, and gold wagers increased 9 percent. Open interest in commodities rose 2.8 percent 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.”

2. 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 percent 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 percent, cotton holdings were the highest since
2010, and gold wagers increased 9 percent.
Open interest in commodities rose 2.8 percent 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.”

3. Commodity Rebound
The S&P GSCI gauge has gained 0.6 percent this year after being down 1 percent on March 4.
The MSCI All-Country World Index of equities climbed 5.7 percent, while the dollar
advanced 3.6 percent against a basket of six trading partners. Treasuries lost 0.9 percent, 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 percent, the most in three months, exceeding the median projection in
a Bloomberg survey of economists, the Federal Reserve said on March 15.
Stimulus Measures
Europe’s leaders including German Chancellor Angela Merkel spoke in favor of growth at a
two-day summit in Brussels last week. Bank of England Governor Mervyn King said that he
sees an argument for bolstering economic recovery by expanding quantitative easing. King
and two colleagues were outvoted last month in a push to expand stimulus. The U.S. will use
8.7 percent of the world’s copper this year, and western Europe will account for 14 percent of
demand, according to Morgan Stanley.

4. The S&P GSCI is up 86 percent since the end of 2008 as the Fed expanded its balance sheet
to more than $3 trillion, joining central banks from Europe to Asia in global stimulus aimed
at boosting growth. U.S. policy makers probably will decide to continue their $85 billion
monthly asset-purchase program at a meeting March 19-20, Credit Suisse Group AG
economists Neal Soss and Dana Saporta said in a note last week.
Bullish commodity holdings fell 24 percent since Jan. 1, as equity markets outpaced gains for
raw materials. Demand from China, the biggest consumer of everything from copper to
soybeans, may decline as industrial output had the weakest start to a year since 2009 and its
copper imports tumbled to a 20- month low in February. The country accounts for 42
percent of global demand for the metal, Barclays Plc estimates.
Supplies Gaining
Copper stockpiles monitored by exchanges in London, New York and Shanghai jumped 43
percent since the start of the year to the highest since December 2003, data compiled by
Bloomberg show. The U.S. Department of Agriculture is forecasting record corn and
soybean crops, and U.S. crude-oil stockpiles have climbed for eight weeks. Copper net-short
positions, or bets prices will decline, totaled 16,764 contracts on March 12, 2.3 percent more
than a week earlier, CFTC data show.
“The question is: has China peaked?” said Tom Stringfellow, the president of San Antonio-
based Frost Investment Advisors LLC, which manages about $9 billion of assets. “If you
think there is an economic slowdown coming, that could very well mean another global
recession, and you wouldn’t be interested in commodities in general.”
Investors withdrew a net $110 million from commodity funds in the week ended March 13,
including $194 million from gold and precious-metals funds, said Cameron Brandt, the
director of research for Cambridge, Massachusetts-based researcher EPFR Global, which
tracks money flows.