Hedge funds rush into biofuel commodities amid Iran war fears

Hedge funds are piling into the market for agricultural commodities used in biofuels, anticipating they will benefit from soaring oil prices amid the war in Iran, the Financial Times (FT) reported. With the conflict shaking energy markets and raising concerns over long-term fuel supply disruptions in the Strait of Hormuz, funds have significantly increased their exposure. According to data from the U.S. Commodity Futures Trading Commission (CFTC), net long positions in soybean oil, a key ingredient for biodiesel, have nearly tripled since the Middle East conflict began. Similarly, positions in corn, used for ethanol, have shifted from bearish to their most bullish level this year. Hedge fund managers and traders told the FT they believe agricultural commodities are poised to be the next market to rally after the recent surge in oil prices. Doug King, head of commodities investment firm RCMA Capital, described the shift in positioning not as a gradual adjustment but as a full-blown entry into the market.