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01-10-2014, 08:10 AM
http://www.businesstimes.com.sg/specials...p-20141001
PUBLISHED OCTOBER 01, 2014
Commodity gluts spur investor exits, signal longish slump
Big banks expect losses for many raw materials to continue
BYLUZI ANN JAVIERPRINT |EMAIL THIS ARTICLE
Southbound: Corn fell to a five-year low on Monday and soybeans were the cheapest since 2010 as farmers begin record harvests in the US, the largest producer of both crops. - PHOTO: REUTERS
INVESTORS are betting that the worst isn't over for commodity prices that already are the lowest in five years. About US$873 billion was pulled from US exchange-traded products backed by raw materials in September
- the most since April, data compiled by Bloomberg shows. Expanding surpluses, a surging dollar and slowing growth in China helped send the Bloomberg Commodity Index to the lowest since 2009, reversing first-half gains fuelled by a polar vortex and dead pigs in the US, and escalating tensions in Ukraine and the Middle East.
Banks from Societe Generale SA to Citigroup Inc expect the losses for many raw materials to continue. US farmers are collecting the biggest corn and soybean crops ever, and global stockpiles of nickel are at an all-time high. Americans are producing the most oil since 1986, compounding a global surplus. China - the largest consumer of grains, energy and metals - is poised for its slowest expansion in two decades.
"The commodity complex as a whole did really well for a long time, and as a result, a lot of money poured in across the board and created oversupply and overcapacity," said Peter Sorrentino, a Cincinnati-based fund manager who helps oversee US$1.8 billion at Huntington Asset Advisors Inc. "It definitely has been an asset class that people have been withdrawing money from. Hedge funds congregate in momentum trades, and over the last two years, commodities have been sources of cash."
PUBLISHED OCTOBER 01, 2014
Commodity gluts spur investor exits, signal longish slump
Big banks expect losses for many raw materials to continue
BYLUZI ANN JAVIERPRINT |EMAIL THIS ARTICLE
Southbound: Corn fell to a five-year low on Monday and soybeans were the cheapest since 2010 as farmers begin record harvests in the US, the largest producer of both crops. - PHOTO: REUTERS
INVESTORS are betting that the worst isn't over for commodity prices that already are the lowest in five years. About US$873 billion was pulled from US exchange-traded products backed by raw materials in September
- the most since April, data compiled by Bloomberg shows. Expanding surpluses, a surging dollar and slowing growth in China helped send the Bloomberg Commodity Index to the lowest since 2009, reversing first-half gains fuelled by a polar vortex and dead pigs in the US, and escalating tensions in Ukraine and the Middle East.
Banks from Societe Generale SA to Citigroup Inc expect the losses for many raw materials to continue. US farmers are collecting the biggest corn and soybean crops ever, and global stockpiles of nickel are at an all-time high. Americans are producing the most oil since 1986, compounding a global surplus. China - the largest consumer of grains, energy and metals - is poised for its slowest expansion in two decades.
"The commodity complex as a whole did really well for a long time, and as a result, a lot of money poured in across the board and created oversupply and overcapacity," said Peter Sorrentino, a Cincinnati-based fund manager who helps oversee US$1.8 billion at Huntington Asset Advisors Inc. "It definitely has been an asset class that people have been withdrawing money from. Hedge funds congregate in momentum trades, and over the last two years, commodities have been sources of cash."