Money managers, viewed as a proxy for speculators, raised their net long position in US-traded commodity futures and options by more than 91,000 contracts to 1.10m lots in the week to August 23, Standard Chartered analysis of regulatory data shows.
"This increase came predominantly from agricultural commodities," Standard Chartered analyst Kuon-Ken Lee said, highlighting a rise of 51,540 contracts in speculators’ net long position in soybeans.
Mr Lee also noted the biggest weekly inflow, of $52m, in the week to Friday since at least May in investor interest in exchange-traded index funds in agricultural products.
The previous week saw an outflow of $14m, in line with the recent trend.
Crops vs gold
The data came amid an outperformance by agricultural commodity futures of shares, and energy, this month, in part on inflation fears stoked by expectations of further lax monetary policy in Western nations in an effort to kick-start economic growth.
"Investors are likely to continue to look at the agri complex as a hedge against inflation – currently undervalued relative to gold, the traditional inflation hedge," Rabobank said.
"The price of gold relative to agri commodities is at highs not seen since the early 1980s," the bank said.
Such a relationship comes despite a rise in corn prices back towards record highs hit in June, amid fears for the US crop, pulling rival grain wheat higher too.
In soybeans, Chicago’s benchmark November contract on Friday closed at its highest since 2008.
The return in speculators’ interest in farm commodities drove them back to a net long position in Chicago wheat – meaning they have more bets which gain on rising prices, than falling prices, of the grain – for the first time in two months.
The turned net long in New York cocoa too, the other major US-traded crop in which they had a net short, and returned to increasing their net long position in raw sugar after three weeks of sell-downs.
Copper was the only raw material tracked by Standard Chartered in which speculators in futures and options had a net short position.