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Hedge funds' bullish commodity bets down most since February.

Hedge funds and other big speculators have cut their bullish bets on commodities by the most since February, trade data showed yesterday, amid signs of stagnating US economic recovery and uncertainty over raw materials demand. Money managers slashed by $9.7bn their net-long holdings across 22 commodities to $59.7bn during the week to April 2, according to Reuters calculations of data released by the Commodity Futures Trading Commission (CFTC). The last time net-long managed money in those markets fell by more was during the week to Feb 19, when there was a drop of $12.9bn. Corn, gold and soybeans accounted for nearly 80% of the latest decline. Since trading for the second quarter began this week, oil, metals and crops prices have sunk to multi-month lows. The selloff came after weaker-than-expected data on US factory growth and private sector hiring raised concerns about the outlook for the No1 economy. On Friday, the Labor Department reported that American employers hired at the slowest pace in nine months in March, sparking another investor stampede out of oil. Aside from disappointing economic data, commodity prices have also been pressured by creeping stockpiles of raw materials, particularly in corn, oil and copper. "On balance, I think the down move we are seeing in commodities will continue into next week," said Edward Meir, analyst at INTL FCStone in New York. At Friday's close, the 19-commodity Thomson Reuters-Jefferies CRB index was down 2.8% on the week for its worst week since October. The CFTC data showed corn having the biggest net outflow in managed money -- $3.14bn -- for the week to April 2. US corn set a nine-month bottom below $6.27 a bushel on Friday and posted a 9.5% loss on the week - its biggest in 21 months. Corn has tumbled since the US Department of Agriculture issued a larger-than-expected stockpile estimate for the grain last week. According to the CFTC data on Friday, hedge funds and other speculators slashed their bullish bets on corn futures and options on the Chicago Board of Trade by 70% after the USDA stockpile forecast. In CBOT soybeans, the net long position fell by 27,707 contracts to 57,287 in the week to April 2. In dollar terms, the reduced net-length stood at nearly $2.5bn. Soybean prices fell to a 10-month bottom below $13.55 a bushel in Friday's sessions due to fears of a potential drop in feed demand from a bird flu in China and seasonal pressure from the harvest of massive soy crops in South America. In gold futures and options traded on New York's Comex, money managers cut their net length by 12,962 contracts to 47,164. Gold saw an outflow of just over $2bn in net-long money for the week to April 2.

Gulf Times Newspaper 2013

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Publication:Gulf Times (Doha, Qatar)
Date:Apr 7, 2013
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