*from www.bloomberg.com, Mar. 11, 2013 (To view original article click here.)
Take Away #1: Hedge Funds cut bets on a commodity rally to a four-year low on signs of surplus supply before Goldman Sachs Group. Inc. said prices had fallen too far and investors should buy.
Key Facts and Figures:
- Speculators reduced net-long positions across 18 U.S. futures and options in the week ended March 5 by 9.2% to 405,885.
- This is the lowest since March 2009, according to U.S. Commodity Futures Trading Commission data.
- They are most bearish on copper in four years, and are betting on declines for coffee, hogs, sugar, soybean oil, wheat, and natural gas.
Take Away #2: There is disagreement about the extent of how much demand for commodities will rise based on growth.
Key Facts and Figures:
- Commodities have become a victim of their own success has higher prices have created more supply.
- Commodities retreated 5.1% since reaching a four-month high Feb. 13 despite optimism driving the MSCI All-Country World Index of equities to a 56-month peak.
- Supplies will outpace demands for 12 of 18 metals and agriculture goods, according to Barclays Plc and Rabobank International.
- Goldman raised its three-month outlook for raw materials to “overweight” from “neutral” on March 7, saying Chinese growth will support prices.
Take Away #3: Commodities climbed and the dollar advanced while treasuries slid.
Key Facts and Figures:
- The S&P 500 GSCI Spot Index of 24 commodities climbed 1% last week.
- The MSCI equity index gained 1.8%.
- The dollar rose 0.5% against six trading partners.
- Treasuries lost 0.9% today.
- The raw-materials index rallied 85% in the four-years to Dec. 31 as record global stimulus measures revived economies and sent commodities prices to records.
- A weakening dollar also increased the appeal of commodities dominated in the currency.
- The dollar climbed 3.7% against six major trading partners this year, the best start since 2009.
- Investors pulled $4.66 billion from commodities this year with an inflow of $5.05 billion the year earlier, according to EPFR Global.
- Commodity assets under management totaled $430 billion in January, from a record $451 billion in April, data from Barclays show.
Take Away #4: Funds are dumping commodities as increasing supply outweighs the improving economic outlook, however raw materials prices could rebound as China’s economy accelerates.
Key Facts and Figures:
- The 120-day correlation between the S&P GSCI and the MSCI All-Country World Index has weakened to 0.47, from 0.72.
- Crude-oil stockpiles in the U.S., the biggest consumer, are at the highest level since the end of June.
- Copper supplies monitored by exchanges in New York, London, and Shanghai have jumped to the highest since Dec. 2003.
- Global inventories of wheat and soybeans will be much higher than forecast a month earlier.
Take Away #5: China maintained its expansion target and spending will rise to maintain support for economic growth, according to Premier Wen Jiabo.
Key Facts and Figures:
- China maintained its expansion target at 7.5% for 2013.
- The country plans to open 5,200 kilometers (3,232 miles) of new railway lines and build 80,000 kilometers of highways.
- Urbanization will boost the nation’s metal demand.
Take Away #6: As the U.S., China, and other emerging markets are showing signs of acceleration, this could be a good time to build commodity positions as a demand boost may help to perk up prices.
Key Facts and Figures:
- Payrolls in the U.S. rose 236,000 last month, and the jobless rate dropped to 7.7%, the lowest since Dec. 2008.
- The U.S. consumes the most corn and is the second biggest metals user after China.
- Fund managers pulled $990 million from commodity funds in the week to March 6.
- Outflows from gold and precious metals funds totaled $1.12 billion.
- Holdings in exchange-traded products backed by gold contracted a record 106.2 tons last month, and another 21.9 tons in March.
- Declining copper prices more than doubled to a net-short position of 16,391 futures and options, the most negative outlook since March 2009.
- Traders are the most bullish in five weeks with 13 analysts surveyed by Bloomberg expecting prices to rise this week.
- Four forecast declines and three were neutral, the highest proportion of bulls since Feb. 1.
Take Away #7: Metals stockpiles grow and bullish wagers on Gold and Crude-oil dropped.
Key Facts and Figures:
- China’s inventories of steel reinforcement-bar jumped 86% this year.
- China’s copper imports tumbled 38% from a year earlier to 298,102 tins in February, the lowest in 20 months.
- Barclays estimates global supplies of copper will outpace demand by 56,000 tons this year and forecasts a zinc and aluminum surplus of 273,000 tons and 1.82 million tons respectively.
- Bullish gold wagers dropped 27% to 39,631 futures and options, the lowest since July 2007 and holdings are down 61% this year.
- Bullish wagers for silver tumbled 47% to 6,118 contracts and platinum wagers fell 8.7% to 30,705.
- Crude-oil wagers slid 4.4% to 167,498 contracts and the net-long position in heating oil tumbled 61%.
Take Away #8: The enthusiasm for commodities being the diversifying risk trade for the past few years seem to have changed, affecting commodities in agriculture as well.
Key Facts and Figures:
- A measure of speculative positions across 11 agricultural products from wheat to coffee to cattle fell 3.4% to 140,580, the lowest in almost four years.
- Wagers on a decline for coffee increased to 24,651 contracts and were at a record bearish outlook of 28,454 in the week ended Feb. 19.
- Rabobank forecasts supply will outpace demand by 6.73 million bags this season, each weighing 60 kilograms from a 1,08 million-bag shortfall in the previous season.
*To view original article from www.bloomberg.com click here.