Investors are boosting wagers on higher commodity prices at the fastest pace in almost four years, rebounding from the least bullish position since 2009, on signs that the US is accelerating and Europe’s debt crisis is easing.
The Goldman Sachs Commodity Index (GSCI) lost as much as 1.3 percent this year before erasing declines. The price slump in raw materials was “overdone,” Goldman Sachs Group Incorporated said in a March 7 report, raising its outlook for commodities to “overweight” from “neutral.” The Washington-based International Monetary Fund is predicting global growth of 3.5 percent in 2013, up from 3.2 percent in 2012.
“The biggest surprise could be if growth begins to accelerate, and oil and metals prices move to the upside,” Jeffrey Currie, the head of commodities research at Goldman in New York, said. “History says that you never want to be short of commodities during an economic expansion. The risk is more to the upside than to the downside, should the economy accelerate.”
Hedge funds and other large speculators increased net-long positions across 18 US futures and options by 10 percent to 679,191 contracts in the week ended March 26, data from the Commodity Futures Trading Commission show.
The bets surged 67 percent in three weeks, the biggest advance since May 2009. Wagers on higher oil prices climbed the most this year, while those for cattle are at a six-week high.
The Standard & Poor’s GSCI Spot Index of 24 raw materials has rebounded 2 percent from a 10-week low on March 4 as contracts outstanding jumped 10 percent last quarter, the most in a year. The US economy grew at a faster pace than previously estimated in the fourth quarter, the Commerce Department said March 28. Cypriot President Nicos Anastasiades vowed to keep his nation in the euro on March 29, after it became the fifth country to seek a rescue since the region’s crisis began in 2009.
“Over the last quarter, we’ve seen an improvement in US economic activity far above expectations,” said Chad Morganlander, a Florham Park, New Jersey-based fund manager at Stifel Nicolaus & Co., which oversees about $130 billion of assets. “That has ginned up demand expectations.”