RPT-Hedge funds raise bullish commodity bets first time in 5 weeks

Sun Mar 17, 2013 8:59pm GMT

(Repeats Friday's story, no change to text)

* Natgas sees nearly $2 billion in new long money

* Corn sees almost $1 billion in fresh inflow

By Barani Krishnan

March 15 (Reuters) - Hedge funds and other big speculators raised their bullish bets on U.S. commodities for the first time in five weeks, piling mostly into natural gas and corn due to favorable supply and demand situations, trade data showed on Friday.

Natural gas saw close to $2 billion worth of new net long contracts by the so-called money managers during the week to March 12, according to Reuters calculations of the data released by the Commodity Futures Trading Commission (CFTC).

Corn had almost $1 billion in fresh inflow, the CFTC's weekly report on commodity trader positions showed. The report is compiled at the close of each Tuesday and issued on Fridays.

The broadly optimistic mood among hedge funds and speculators during the week to March 12 raised the net-long managed money across 22 commodity markets to more than $59 billion from around $54 billion at the close of March 5.

The rise of about $5 billion was the first in five weeks, and came after the net-long money had fallen to a 15-month low, Reuters records of the CFTC reports showed.

Nearly $30 billion in net managed long money was wiped out over the past month as hedge funds and other non-commercial investors cut their commodity holdings on fear about the global economic recovery. Some of that money went into equities as the key Dow index for U.S. stocks hit record highs.

In the case of natural gas, the net long position held by money managers hit a three-year high for the week to March 12 as cold weather drove U.S. demand for gas used in heating.

Gas contracts on the New York Mercantile Exchange (NYMEX) saw a net inflow of $1.2 billion from hedge funds and other speculators. Gas positions on the InterContinental Exchange (ICE) saw a net long build of nearly $600 million.

In Friday's trade, the front-month natural gas contract on NYMEX hit a 3-1/2-month high of $3.924 per million British thermal units after forecasts for more cold weather in key U.S. consuming regions next week.

Traders said the chart picture for gas looked supportive, with the front-month contract having broken through several key resistance levels on its 25 percent rally from a five-week low of $3.125 per mmBtu hit in mid-February.

But some cautioned that the impending end of winter could provide resistance to higher prices.

"As we've been noting, however, the market is in full weather-driven mode here and is only as strong as the underlying forecast, and will see a downside test once the weather pattern changes," said Citi Futures energy specialist Tim Evans.

The net long managed money in corn rose by nearly $920 million.

The key second-month corn contract on the Chicago Board of Trade rallied in four of the five sessions during the week to March 12, reaching a near five-week high of $7.17-3/4 a bushel.

The run-up came after the U.S. Department of Agriculture kept to a surprisingly-modest ending stocks forecast of 632 million bushels for corn in the current season -- the smallest supply in 17 years versus market expectations for an uptick in estimates. (Editing by Bob Burgdorfer)

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