Bloomberg: 'Nasty' Weather Conditions Are Attracting The Attention Of Hedge Funds

According to a report by Bloomberg, the ongoing "nasty" weather seen in certain parts of the world is attracting the attention of hedge funds looking to profit.

Bloomberg stated that many hedge funds are doubling their investments in commodities that could gain in value from a drought in Brazil and flooding in Argentina. Specifically, hedge funds are now the most bullish on soybeans dating back to May 2014 due to excessive rains in Argentina.

In addition, money managers have been trimming their positions that profit on declining corn prices given dryness issues that are affecting the corn harvest in Brazil – the third largest exporter of corn.

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The Bloomberg Agriculture Subindex of eight farm products is on track for its best April rally in nearly 20 years.

Meanwhile, China's stabilizing economy and a weaker U.S. dollar are also bullish indicators for the commodity market.

"Now that we've started planting, we're thinking about how the growing season will pan out, and we're putting some more risk premium into the market, it's been beaten down so much," said Chris Narayanan, the head of agricultural research at Societe Generale SA in New York. "If the weather gets worse in Brazil and you have hot, dry weather in the U.S., you could see another massive rally."