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Global fund managers have piled into commodities on fears the Iran war will spark a significant inflation surge, a closely followed monthly survey showed Tuesday.
The BofA Global Fund Managers Survey for May shows managers the fourth-most overweight commodities in the history of the series going back to 1999. BofA notes that the survey’s contrarian signals suggest managers might want to rein in that exposure somewhat.
The survey found fund managers’ commodities allocation is net 31% overweight in May, up from 20% overweight in April. That’s two standard deviations above the long-term average, BofA said. Based on survey positions relative to history, “contrarians would be covering shorts in bonds, US dollar, UK assets & consumer stocks, and paring length in commodities, stocks, EM (emerging-market) assets & tech/semis,” wrote BofA analysts led by Michael Hartnett.
Commodities are certainly enjoying a strong 2026. Gold, silver and precious metals charged into the new year with a series of eye-popping new highs before running out of steam, but crude oil and fuel futures have surged since the start of the Iran war and the closure of the Strait of Hormuz. Agricultural commodities have joined the rally, and have been increasingly correlated with energy as those surging crude and product prices fuel demand for biofuels.
See: Biofuel bets meet rising food shortage fears after USDA slashes U.S. wheat crop forecast
And then there are inflation fears, which appear to have stoked interest in commodities as a broad asset class. Asked what the biggest tail risk is, 40% of investors said “2nd wave inflation,” up sharply from 26% last month.
The survey found 69% of investors say they expect “stagflation” (below-trend growth and above-trend inflation), though that’s down from 76% in April. One in four expect a “boom” (above-trend growth and above-trend inflation), up from 15%. Two percent say “goldilocks” (above-trend growth and below-trend inflation), vs 4% a month ago, while 0% say “stagnation” (below-trend growth and below-trend inflation), from 1%.
Australia wheat acres crimped: Australia, the third-largest wheat exporting nation, may have as much as 10 million tons less to ship in the upcoming season, an amount equivalent to 5% of annual global exports, Reuters reported, noting the toll that dry weather alongside the surge in fertilizer and fuel costs is having on planting activity. Australia is the first major grain exporter to plant wheat since the beginning of the Iran war, which has seen the closure of the Strait of Hormuz choke off crude, fuel and fertilizer imports. The report noted other countries are also likely to grow less, shrinking food supply further.
- Six agricultural analysts contacted by Reuters said the amount of Australian land planted with wheat would fall by between 7% and 20% from last year, potentially removing the grain from an area nearly the size of Belgium. That means the harvest, due toward year-end, could be between 16% and 41% smaller, the analysts estimated, shrinking from last year’s roughly 36 million tons to as low as 21.3 million tons, if the most pessimistic estimate proves correct and dry conditions extend their grip.
Putin-Xi summit: Russian President Vladimir Putin on Tuesday hailed his country’s close relationship with China ahead of his arrival in Beijing for a summit meeting with Chinese leader Xi Jinping. Putin’s visit comes just days after President Donald Trump and Xi concluded their summit meeting last week.
- In a video address released shortly before his departure from Moscow, Putin highlighted the “deep trust” between the two countries and the strength of their economic relationship, noting that bilateral trade exceeded $230 billion last year despite sanctions and the war in Ukraine, the South China Morning Post reported.
- Putin has visited China more than 20 times, and has met his Chinese counterpart in person more than 40 times since 2013, the report said, citing China’s state news agency Xinhua.
An oceangoing ethanol first: Swiss power company WinGD is to supply ethanol-powered engines for two bulkers chartered by Brazilian miner, Vale, for 25 years, according to Seatrade Maritime News. The report said X-DF-M/E will be the first engines designed primarily to run on ethanol for installation on oceangoing ships. They are to be installed on two 325,000 dwt very large ore carriers (VLOCs) to be built at China’s Beihai Shipbuilding for Shandong Shipping Corporation and are likely to be delivered by early in 2029. Options in the contract will allow more engines to be built if the two-ship series is extended.
Jet fuel fears ease: European airlines and oil refiners expect to avoid outright jet fuel shortages this summer after plants maximized output, boosted imports and governments tapped strategic reserves, the Financial Times reported. The loss of supply from the Middle East as a result of the Iran war has threatened to send the airline industry into crisis, but Ryanair chief Michael O’Leary said on Monday that he had “almost zero concerns about fuel supplies across Europe” for the summer, the report noted.
- “There was a real concern about a month, two months ago,” he said, according to the FT. But increased supplies from the US, west Africa and Norway, combined with some airlines in central Europe taking fuel from Russia, mean supply to the continent will now be fine, he predicted.
Refiners still expect peak travel season to be a “stress test” for the sector, but multiple oil companies said a warning of shortages within weeks from the International Energy Agency seemed unlikely to materialize.
Food giants back regenerative ag push: Forty major food and agriculture groups, including Carlsberg, Diageo, Nestle and Mondelez, signed a joint declaration to advance and scale regenerative agriculture, a nonprofit network said Tuesday.
Reuters reported that SAI Platform’s regenerative agriculture program aims to address climate change, biodiversity loss and soil degradation while securing agricultural supply chains. Signatories, which include ADM, McCormick, and Unilever (ULVR.L), said no single organization or solution can drive the systemic change required.
Grilling season meets America 250: Food giant Kraft Heinz plans a cookout-themed marketing push around this summer’s U.S. semiquincentennial celebrations, Food Dive reported. “The United Tastes of America” campaign is rolling out for Memorial Day, the unofficial start of summer cookout season. The report said it will feature new ads showing outdoor gatherings like barbecues where Kraft Heinz supplies the hot dogs, ketchup, cheese for burgers, salad dressing and more.
Food Dive noted that 81% of surveyed U.S. consumers plan to attend more social gatherings this summer than last, according to America250 and YouGov data cited in the Kraft Heinz announcement.
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