Salient to Investors:
Hedge funds reduced bets on a commodity rally by the most since 2008 on rising supplies of everything from copper to sugar and slowing US growth.
Investors are betting on a decline in silver for the first time since data began in 2006, and have record bearish positions in copper and sugar.
UBS said the commodities supercycle has ended and returns are unlikely to match the performance of the past decade.
Rob Haworth at US Bank Wealth Mgmt said we are awash in supplies and sees prices remaining under pressure until the growth issue gets resolved.
Standard Chartered raised its forecast for 2013’s copper surplus. Barclays says copper supplies will outpace demand for aluminum, lead, nickel and zinc in 2013. US crude-oil stockpiles reached the highest in more than 22 years last week.
The median investor/analyst expects the Standard & Poor’s GSCI Spot Index to rise to 644 at the end of June.
Quincy Krosby at Prudential Financial said slowing economies will mean increased global stimulus measures, boosting prospects for a commodity rebound.
Fund managers withdrew $1.19 billion from commodity funds in the week ended April 3, Cameron Brandt, the director of research for Cambridge, Massachusetts-based EPFR Global, which tracks money flows, said in an e-mail. Outflows from gold funds totaled $930 million.
John Toohey at USAA Investments said rising supplies when fundamentals are already weak, the structural problems in Europe, and signs of a slowdown in the US do not augur well for commodities.
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