Fri Apr 13, 2012 11:06pm BST
* Sharpest drop in managed money net longs since Dec
* Copper price down 5 pct, open interest over the week
By Barani Krishnan
April 13 (Reuters) – Hedge funds and other money managers slashed their exposure to U.S. commodities by around $9 billion this week, government data showed o n F riday, in the biggest such cut in four months that came on worries over China‘s slowing economy and fading prospects for new U.S. economic stimulus.
The value of net-long positions held by money managers across 24 U.S. commodity futures markets fell to around $90.7 billion for the week to April 10 from $99.3 billion a week earlier, according to Reuters’ computation of data issued by the Commodity Futures Trading Commission (CFTC).
The copper market took one of the biggest hits for the week, falling 5 percent in both price and open interest, or the number of contracts open for trading.
Speculators also cut their net long positions in U.S. crude oil to the lowest level since December.
The $9 billion drop in net-long values was the sharpest reduction shown by the CFTC’s Commitment of Traders (CoT) data since the week ending Dec. 20, when commodities tumbled on concern about the European debt crisis.
The CoT data is issued every Friday and tracks traders commitments beginning each Wednesday to the Tuesday of the following week. For the week ending this Tuesday, the total number of net-long contracts in the 24 markets held by money managers, including hedge funds, fell by 111,870, or 8.7 percent, to 1,180,535 contracts.
Investors pulled money out of commodities after minutes of the Federal Reserve’s March meeting — released last week — gave dim hope that the U.S. central bank would embark on a QE3, or a new round of government bond buying, that could flood markets with cash.
Concerns over China’s slowing economy added to the selloff. Data on Friday showed gross domestic product in the No.2 economy growing at its slowest rate in nearly three years in the first quarter. China is the biggest importer of base metals and one of the largest consumers of most major raw materials produced by the world.
“While the lack of QE3 and worries about China are enough to keep the long money in commodities on a tight leash, renewed concerns about Europe, particularly Spain’s debt, are making investors more flighty,” said Adam Sarhan, chief executive at New York’s Sarhan Capital.
(Reporting By Barani Krishnan; Editing by David Gregorio)