Hedge Funds’ Fourth Bullish Week Boosts Copper Bets: Commodities

Hedge funds increased bullish commodity bets for the fourth straight week and became the most bullish on copper since December as signs of faster growth in the U.S. and China fueled the best start to the year since 2005.

Speculators boosted net-long positions across 18 U.S. futures and options in the week ended Feb. 5 by 11 percent to 885,655 contracts, marking the longest stretch of gains in more than six months, U.S. Commodity Futures Trading Commission data show. Traders lifted bullish wagers on everything from copper to platinum, corn and soybeans.

A gauge of prices for 18 commodities most tied to economic growth, including burlap and steel, reached the highest since September 2011 at the end of January as global manufacturing gained. In China, the world’s top consumer of cotton, copper and pork, trade grew more than analysts forecast, the government said Feb. 8. Service industries in the U.S., the biggest user of crude oil and corn, expanded more than analysts predicted in January, a private survey showed Feb. 5.

“With China and the U.S. registering growth, the economically-sensitive commodities will do well,” said Michael Strauss, who helps oversee about $26 billion as chief investment strategist at Commonfund in Wilton, Connecticut. “The global environment is favorable for commodities.”

Markets Rally

The Standard & Poor’s GSCI Spot Index of 24 raw materials traded within 0.1 percent of a fourth-month high on Feb. 8, before ending the week little changed. The commodity gauge is up 4.9 percent in 2013, the biggest gain to start a year since 2005. The MSCI All-Country World Index of equities climbed 4.7 percent, while the dollar rose 0.6 percent against a basket of six trading partners. Treasuries fell 0.8 percent, a Bank of America Corp. index shows.

Exports from China advanced 25 percent in January from a year earlier and imports rose 29 percent, according to government data. Passenger-vehicle sales surged 49 percent to a monthly record, a state-backed group said Feb. 7. The average automobile contains about 50 pounds of copper and 4 grams (0.13 troy ounce) of palladium, platinum or rhodium, according to the International Copper Study Group and Johnson Matthey Plc.

The U.S. non-manufacturing index for January was at 55.2, compared with analyst estimates for a reading of 55, the Institute for Supply Management said. Readings above 50 signal expansion. The group’s employment gauge was the strongest in seven years.