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Hedge funds reduced wagers on a rally in commodities to the lowestthis year on mounting speculation that Greece will leave the euro,slowing global growth and curbing demand for everything from copperto soybeans. Money managers reduced net-long positions across 18 U.S. futuresand options by 15 percent to 616,841 contracts in the week endedMay 15, the lowest since Dec. 27, Commodity Futures TradingCommission data show. Gold bets fell for a second week and to thelowest since December 2008, while copper holdings tumbled 69percent, the most in five weeks. Cotton wagers tumbled to thelowest in five years. About $4 trillion was erased from the value of global equitymarkets this month as Europe s debt crisis escalated. Moody sInvestors Service lowered debt ratings on 16 Spanish banks on May17, while Fitch Ratings cut Greece s credit rating on concern thatthe country may be the first to exit the 17- nation currency bloc.Home prices in China, the biggest metals consumer, fell in a recordnumber of cities last month, government data showed. The outlook for commodities is not good, said Eric Sprott, whoruns Toronto-based Sprott Asset Management LP, which manages $9billion of assets. The world economies are slowing down. China sgrowth rate is softening, and it s not even debatable whetherthere will be a recession in Europe. The Standard & Poor s GSCI Spot Index of 24 commodities fellfor a third consecutive week, losing 2 percent and capping thelongest slump since September. The MSCI All-Country World Index ofequities dropped 5.3 percent, and the dollar climbed 1.3 percentagainst a basket of six major currencies. Treasuries returned 0.7percent, a Bank of America Corp. index shows. Copper Erases Gains Thirteen of the raw materials tracked by S&P declined lastweek. Copper tumbled 4.9 percent, the most in 2012, and erased itsgains for the year during after-hours electronic trading on May 18.Orange juice fell to the lowest since October 2009 last week,posting a 17 percent slump. Turmoil in financial markets caused by Europe s debt crisis maylast another two years, German Finance Minister Wolfgang Schaeublesaid in a recorded interview broadcast on May 18 on France sEurope 1 radio station. Fitch Ratings lowered Greece s ranking to CCC from B-, saying thestrong showing of anti-austerity parties in elections on May 6and subsequent failure to form a government underscored the lack ofpublic and political support for the country s bailout from theEuropean Union and International Monetary Fund. Record Dollar Rally The Dollar Index, which tracks the greenback against the currenciesof six major U.S. trading partners, climbed for 14 consecutivesessions through May 17, the longest winning streak since itsinception in 1973. Global stimulus programs, especially in China, may help commoditiesto rebound, said James Paulsen, the chief investment strategist atMinneapolis-based Wells Capital Management, which manages $335billion of assets. The People s Bank of China cut lenders reserve requirements by50 basis points from May 18. Federal Reserve Chairman Ben S.Bernanke on April 25 said he was prepared to take further action toaid the economy if necessary, even as he signaled that he didn tsee an immediate need to add stimulus with inflation near theFed s goal and unemployment falling. Bottoming Out We are seeing easing moves in China, and that will increasedemand for commodities, but investors want to see the actualmomentum on main streets before they come back, Paulsen said. In the second half, we will see more data that will supportbottoming out of prices. Investors pulled $611 million from commodity funds in the weekended May 16, according to data from Cambridge, Massachusetts-basedEPFR Global, which tracks money flows. This is the fourthconsecutive week of outflows, the longest slide since October,according to Cameron Brandt, the director of research. Gold andprecious-metals funds accounted for $143 million of the outflow, hesaid. Total commodity outflows were $1 billion in April and assets undermanagement fell to $429 billion from $435 billion the month before,Barclays Plc said May 17. Tiberius Asset Management AG said its twoCommodity Alpha funds were down about 2 percent each in April,lagging behind their respective benchmarks. Losses in agricultureand platinum spurred the declines, the Zug, Switzerland-basedcompany said May 18. Gold Holdings Copper wagers fell for a second consecutive week to 4,833 futuresand options, a three-week low. Holdings plunged 74 percent fromthis year s peak on April 3. Prices dropped to as low as $3.4315 apound on May 18. The metal ended last year down 23 percent at$3.436 on the Comex in New York. Europe uses about 18 percent of the world s copper, and demandfrom the region will probably decline 2 percent this year, Barclaysestimates. Funds cut their gold holdings by 15 percent to 78,619 contracts,the lowest since Dec. 9, 2008, CFTC data show. Prices slumped 17percent since reaching a record $1,923.70 an ounce in New York onSept. 6 as investors favored the dollar as a haven. People were beginning to believe that gold can stand up againstall crises, but the last six months proved that theory wrong, said Donald Selkin, the New York-based chief market strategist atNational Securities Corp., which manages about $3 billion ofassets. Gold needs to come back to more realistic levels, whichis about $1,100. A measure of net-longs for 11 U.S. farm goods dropped 18 percent to358,940 contracts, the biggest slide since mid- January. Cottonspeculators increased their net-short position, or bet on adecline, by 79 percent to 13,068 contracts, the most bearish sinceMay 2007. Commodities are headed lower and sending us a signal that globaleconomies are slowing much more than the optimists had expected, said Clark Yingst, the chief market analyst at New York-basedJoseph Gunnar & Co. Investors should employ caution. I am an expert from led-flashlightkeychains.com, while we provides the quality product, such as Led Pen Lights , China Flexible Led Strip Lighting, Led Flashlight Keychains,and more.
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