From Saxo Bank's Trading Floor blog:
- Commodity exposure slashed as sentiment soured
- Most heavyweights saw heavy selling
- Gross short on Nymex hits highest ever
Hedge Funds cut their bullish exposure to 24 commodities by 29% during the week of March 3. Exposure were cut across all sectors bringing the net-long down to just 451,000 lots of futures and options. Sentiment of this nature was last seen in March 2009 during the global financial crisis.
Rising supplies, a surging dollar and falling emerging market currencies combined with the expectations of a rising rates in the US and a weak outlook for China has cut demand for many key commodities at a time of rising supply.
Fourteen of the 24 futures tracked in this report were sold with most of the commodity heavyweights such as crude oil, gold, corn, wheat and sugar all seeing heavy selling. Outright bearish positions are now being held in NY Harbor ULSD, natural gas, CBOT wheat, sugar, Arabica coffee and orange juice.
Crude oil: While gross long positions in WTI crude has remained elevated throughout the month-long selloff, the continued rise in US production and inventories have attracted an increased number of short sellers in recent weeks. Not least during the latest reporting week where the gross short on Nymex jumped by 20,361 lots to 138,007, the highest ever.
Gold:
Bullish bets on the yellow metal was cut for a fifth consecutive week
to 88,000 lots which is the lowest since early December when it began a
two-month decoupling from the rising dollar. Renewed focus on the
advancing dollar combined with the beginning of quantitative easing in
Europe and the outlook for rising US interest rates has once again seen
investors going for cover. This trend undoubtedly continued after last
Tuesday's cut-off time considering the negative price impact of last
Friday's strong job report and the US dollar surging to a new 11.5 year
high.
The rising dollar and with it the negative implication for US farmers competitiveness in the global market combined with the outlook for ample supply this year also asserted some additional downward pressure on key crops. The net-long corn position fell to a 13-month low while the wheat sellers took the net position deeper into negative territory....MORE
