(Bloomberg News) Hedge funds cut bullish commodity bets for a sixth straight week, the longest slump since the depths of the global recession four years ago, on mounting concern that economies are slowing.
Money managers lowered combined net-long positions across 18 U.S. futures and options by 17 percent to 772,512 contracts in the week ended Nov. 13, Commodity Futures Trading Commission data show. Holdings have tumbled 38 percent since Oct. 2 in the longest retreat since August 2008. Investors turned bearish on copper for the first time since August.
Commodities are little changed this year as weaker growth and more supply will mean surpluses in sugar, aluminum and zinc, according to Morgan Stanley. U.S. industrial production unexpectedly declined in October, while applications for jobless benefits rose to the highest since April 2011, separate reports showed last week. The 17-nation euro-area's economy tumbled back into recession last quarter for the second time in four years, official figures showed Nov. 15.
"I am not bullish on commodities," said Martin Murenbeeld, the chief economist at Toronto-based DundeeWealth Inc., which manages about C$100 billion ($97 billion) of assets. "I don't think we are going to see improvement in the world economy for some time as there are too many problems."
The Standard & Poor's GSCI Spot Index of commodities has gained 0.9 percent this year as the MSCI All-Country World Index of equities advanced 8 percent and the dollar rose 0.8 percent against a basket of six major currencies. Treasuries returned 2.8 percent, a Bank of America Corp. index shows.
Production at U.S. factories, mines and utilities dropped 0.4 percent last month, Federal Reserve data showed Nov. 16. Economists projected a 0.2 percent gain, according to the median forecast in a Bloomberg survey. Gross domestic product in the euro bloc slipped 0.1 percent in the third quarter after a 0.2 percent decline in the previous three months, the European Union's statistics office said.
U.S. oil output rose for a 10th week to 6.71 million barrels a day, the most since May 1994, the Energy Department reported Nov. 15. Copper inventories monitored by exchanges in New York, London and Shanghai have climbed for three weeks to the highest since May. Supplies will exceed demand in cotton, nickel and lead this year, Morgan Stanley said in a Nov. 12 report. Barclays Plc expects the glut in aluminum to expand 29 percent next year.
Money managers added a net $681 million to commodity funds in the week ended Nov. 14, with gold and precious metals accounting for $732 million, according to Cameron Brandt, the director of research at Cambridge, Massachusetts-based EPFR Global, which tracks money flows.
Exports from China rose 11.6 percent in October from a year earlier, the fastest pace in five months, the Beijing-based customs administration said Nov. 10. The nation is the world's biggest consumer of cotton, soybeans and pork. The U.S. is the largest crude oil and corn user, and Europe accounts for about 18 percent of global copper demand, Barclays estimates.