(Bloomberg News) Speculators increased wagers on rising commodities to the highest level since November just as prices headed for the biggest three-day slide in almost a month.

Money managers expanded combined net-long positions across 18 U.S. futures and options by 7.2 percent to 719,991 contracts in the week ended Jan. 10, Commodity Futures Trading Commission data show. The Standard & Poor's GSCI Spot Index of 24 raw materials fell 2.5 percent in the following three days.

While the index rose 14 percent from a 10-month low in October, prices dropped last week after the U.S. government predicted supplies of corn and soybeans that were bigger than anticipated by analysts. A report on U.S. retail sales fell short of forecasts while jobless claims exceeded estimates. The dollar rose to a 15-month high, increasing the cost of dollar- denominated raw materials outside the world's biggest economy.

"The recovery is modest," said Adrian Day, who manages about $180 million of assets as the president of Adrian Day Asset Management in Annapolis, Maryland. "Is it too early to say we've seen the turn? Probably. I'm not buying at these prices after the rallies we had the past few weeks."

The S&P GSCI fell 1.6 percent last week, the biggest drop in a month. The MSCI All-Country World Index of equities rose 1 percent, with about $750 billion added to the value of global stocks. The U.S. Dollar Index, a measure against six trading partners, rose 0.3 percent, and the yield on 10-year Treasuries fell 0.09 percentage point to 1.86 percent, the lowest in more than three weeks, Bloomberg Bond Trader prices show.

Natural Gas Slide

Eleven of the 24 raw materials tracked by the S&P GSCI gauge declined last week, led by a 13 percent drop in natural gas. Corn fell 6.8 percent, the most since the end of September, wheat retreated 3.6 percent and soybeans 3.2 percent. Natural gas fell another 4.9 percent today to a two-year low.

Sales at U.S. retailers climbed 0.1 percent in November, missing economist forecasts for a 0.3 percent gain, the Commerce Department said on Jan. 12. U.S. jobless claims climbed 24,000 to a greater-than-expected 399,000, the Labor Department said the same day.

"Everybody came into the New Year feeling good, and maybe things got a little ahead of themselves," said Shonda Warner, the managing partner of Chess Ag Full Harvest Partners in Clarksdale, Mississippi, which oversees about $75 million of assets.

Agriculture Holdings

A measure of 11 U.S. farm goods showed speculators raised bullish wagers in agricultural commodities by 8.7 percent, a third consecutive gain, to 400,979 contracts, the highest since the week ended Nov. 8. The bets came before a Jan. 12 report that showed U.S. supplies of corn and soybeans were bigger than forecast after ample harvests and slowing demand. The U.S. was the world's top grower and exporter of both crops last year.

Corn stockpiles may total 846 million bushels before this year's harvest, 12 percent more than analysts expected, the U.S. Department of Agriculture said. Soybean inventories on Aug. 31, before this year's harvest, will be 20 percent larger than forecast last month at a five-year high of 275 million bushels.

Goldman Sachs Group Inc. cut its three-month corn forecast to $6.30 a bushel from $6.85 on Jan. 12, citing the USDA report. The grain closed 2 percent lower at $5.995 the following day. The bank also trimmed its three-month outlook for soybeans to $12.15 a bushel from $12.20 and its wheat estimate to $6.20 a bushel from $6.70. Soybeans closed at $11.5825 on Jan. 13 and wheat $6.0225.

Goldman 'Overweight'

The bank reiterated an "overweight" recommendation on commodities over the next 12 months, predicting a 15 percent gain in the S&P GSCI Enhanced Commodity Index.

Investors put $537 million into commodity funds in the week ended Jan. 11, according to Cambridge, Massachusetts-based EPFR Global, which tracks money flows. It was the first inflow in four weeks and the biggest since Nov. 23, said Cameron Brandt, the director of research. Gold and precious-metals inflows totaled $414 million, he said.

The Federal Reserve said Jan. 11 the economy improved in December across most of the country. Inflation fell to a 15- month low in China, the world's biggest consumer of everything from zinc to copper to cotton, giving policymakers more leeway in easing monetary policy to shore up growth.

"The mindset of the investor though is that no one wants to miss a rally, so they've always got a toe in the water," said Jon Fisher, a fund manager at Fifth Third Asset Management in Minneapolis, which oversees about $16 billion of assets. "It doesn't take much for them go get both feet in."