Investors last month pulled more money out of U.S. exchange-traded products backed by commodities than they have all year, as signs of supply gluts drove the biggest price slump since the financial crisis.
About $1.05 billion was removed from the ETFs in September, the biggest monthly withdrawal since December, data compiled by Bloomberg show. Outflows were led by redemptions from precious metals and energy. Money mangers have cut their combined bullish bets across 18 U.S. traded commodities for 13 straight weeks, the longest streak since the data begins in 2006, while open interest in raw materials fell last quarter by the most in two years.
The Bloomberg Commodity Index slumped 12 percent in the three months ended Sept. 30, the most since the last quarter of 2008. Prices fell amid expanding supplies, a surging dollar and weakening economic growth in China, the world’s largest consumer of grains, metals and energy. Eighteen of the 22 raw materials tracked by the measure dropped.
“Demand has been tepid, more so than people expected, particularly for the crude-oil market, which is awash in supply,” Aakash Doshi, an analyst who tracks investor flows at Citigroup Inc. in New York, said in a telephone interview. “On the grain side, we’re seeing very strong Northern Hemisphere supply. On metals, there are concerns about China.”
The Bloomberg Commodity Index fell 5.6 percent this year to 118.7271 today. The MSCI All-Country World Index of equities rose 0.9 percent. The Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, climbed 4.7 percent.
U.S. farmers are collecting the biggest corn and soybean crops ever, and global inventories of nickel tracked by the London Metal Exchange are at an all-time high. U.S. crude oil production is near the highest since 1986, compounding a surplus. China is poised for its slowest expansion in two decades.
Combined net-long positions across 18 U.S. traded commodities dropped 10 percent to 450,424 futures and options contracts in the week ended Sept. 23, the lowest since August 2013, according to the Commodity Futures Trading Commission. Money managers are bearish on copper, sugar, soybeans and wheat, and are holding the smallest net-bullish wager on gold since January.
Investors pulled $776.6 million from ETFs tracking precious metals last month. Assets in gold-backed ETPs fell for seven straight quarters and are at the lowest in five years.