Bloomberg – Hedge funds reduced bets on a commodity rally by the most since 2008 as rising supplies of everything from copper to sugar and slowing U.S. growth drove prices to the biggest slump in six months.
Speculators cut net-long positions across 18 U.S. futures and options by 31 percent to 468,780 contracts in the week ended April 2, the most since October 2008, U.S. Commodity Futures Trading Commission data show. Investors are betting on a decline in silver for the first time and have record bearish positions in copper and sugar. Corn wagers dropped the most since June 2010, leading the biggest ever decline in agricultural holdings.
Silver, rubber and corn entered bear markets last week, joining declines in raw materials from coffee to wheat, on signs that production will outpace demand. The commodities supercycle, or longer-than-average period of rising prices, has ended and returns are unlikely to match the performance of the past decade, UBS AG said April 2. U.S. employers hired the fewest workers in nine months in March, and the jobless rate in the 17- nation euro area rose to a record.
“There has been a gradual buildup in supplies, and that is especially challenging because slowdown concerns are growing,” said Rob Haworth, a senior investment strategist in Seattle at U.S. Bank Wealth Management, which oversees about $110 billion of assets. “We’re awash in supplies, so I see prices remaining under pressure until the growth issue gets resolved.”