pull out of commodities, most bearish since end-2011
New York| Saturday June 2, 2012 12:05am BST
- Hedge funds and other money managers withdrew more
than $2.3 billion from commodities markets in the final
week of May, taking their most bearish stance since
the end of December, trade data on Friday showed.
showing speculators took cash off the table for a fourth
consecutive week in the week to May 29 came as the commodity
market was on the brink of bear territory.
Thomson Reuters-Jefferies CRB index .CRB is down 18
percent from its late February highs after Friday's
sharp sell-off, with Brent crude
below $100 per barrel, triggered by weaker-than-expected
monthly U.S. jobs data. Many investors consider a 20-percent
decline to be a bear market.
unemployment numbers compounded an already-gloomy global
economic picture following poor manufacturing data from
China and dismal European
reports on factory activity.
commodities are pretty much in a bear market right now,"
said Shawn Hackett Shawn Hackett of Hackett Advisors,
Boynton Beach, Florida, focusing in particular on corn
are pretty much surpluses in everything and demand is
not robust enough to offset that."
the only pocket of strength, rising more than 3 percent
as investors sought safety amid increasing despair over
the global economy and on expectations that the Federal
Reserve will soon take further steps to stimulate the
stuttering U.S. economy.
Friday's blood bath, speculative investors cut net length
for a fourth consecutive week, liquidating almost $2.3
billion in 22 commodity futures and options as May drew
to a close, trade data for the week to May 29 showed.
the net length measured in dollars to just over $59
billion, its lowest level since the last week of December
when commodity markets were roiled by a strong dollar
and year-end liquidation.
of speculative cash was mostly in corn with over $1.3
billion swept off the table. Prices fell 11.1 percent
in the week covering the data as money managers bet
on a stellar harvest in the fall after farmers' record
huge surplus will bury corn for a couple of years unless
mother nature does something dramatic," said Hackett.
long position was cut by two thirds to 15,578 lots,
its lowest level in almost two years, the Commodity
Futures Trading Commission's weekly commitments of traders
report on Friday showed.
outflow measured by dollar value was largest in corn,
it was countered by natural gas.
in natural gas rose to its largest in nearly a year.
The investor group added 54,224 contracts in NYMEX natural
gas futures and options, NYMEX Henry Hub Swaps, NYMEX
Henry Hub Penultimate Swaps, and ICE Henry Hub Swaps,
and were net long by 164,947.
a 148-percent increase in net length since May 1. Even
so, prices for NYMEX natural gas futures decreased 10.3
percent to $2.429 on the week to Tuesday.
in energy, money managers bet on lower U.S. crude oil
prices cutting net length in New York and London by
1,771 contracts to 139,168 during the period.
fell almost 1 percent to $90.76 a barrel in the week,
but selling intensified in the days after the period
covered by the data. Prices dropped to close to eight-month
lows on Friday to $83.23 a barrel.
money managers doubled their short copper position to
6,757 lots as the market continued to fret about inventory
in China and waning demand in Europe.
switched to a short position in the previous week for
the first time since January. And after Friday's sell-off,
copper on COMEX was on the brink of a bear market, down
almost 18 percent since February's high of $4 per lb.
reinforces the already-negative sentiment about increasing
copper stockpile and production indexes around the world
were very weak," said Frank McGhee, head precious
metals trader of Integrated Brokerage Services LLC.
gold's spectacular run-up on Friday, hedge funds kept
their net length at 2008 lows. A tug-of-war between
longs and shorts ended in a rise in net longs of just
seven lots to 77,325 contracts.
data is likely to show a return of the longs in gold
after its spectacular rally on Friday on expectations
of imminent actions by central banks to boost economic
growth, McGhee said.