By Barani Krishnan
Fri Jun 29, 2012 8:37pm EDT
(Reuters) – Hedge funds largely missed an early opportunity to profit from the biggest commodities rally of 2012 as they barely raised their investments in the sector in the week before the run-up, except in agriculture, data on Friday showed.
Crude oil prices jumped 9 percent on the final trading day of June, leading a last-gasp run-up for the second quarter by raw materials markets, including metals and grains. The rally was sparked by a deal that allowed Spain and Italy easier access to European Union funding to cut their borrowing costs.
Data from the Commodity Futures Trading Commission showed hedge funds and other money managers hardly raised their net-long positions — or bets on higher prices — in most commodity markets tracked by the CFTC during the week to June 26.
“This indicates at the least that not many had seen this rally coming,” said Adam Sarhan, chief executive at Sarhan Capital in New York.
“Last week was a mild week for markets. It wasn’t really risk-on or risk-off. So hedge funds and large institutions were in a wait-and-see stance ahead of the European summit, before committing new capital.”
The CFTC data, deciphered by Reuters, showed the total net-long managed money in some 24 commodity markets tracked by the CFTC falling by around $15 million to about $59 billion.
Money managers raised their net shorts, or bearish bets, on copper and gold as prices for both remained depressed in the week to June 26 due to worries about spiraling Spanish and Italian borrowing costs and the strong dollar against the euro.
The net-short managed money on copper rose by 16 percent — or around $155 million — to about $1.14 billion in the week to June 26.
Copper prices surged more than 4 percent on June 29 — the final trading day of the second quarter — after EU leaders announced the funding deal for Madrid and Rome.
Net longs held by money managers in gold fell by 19 percent, or about $3.2 billion, to about $13.2 billion. On Friday, gold futures rose more than 3 percent.
In oil, hedge funds raised their bullish exposure by less than 1 percent in the week to June 26. CFTC data, computed by Reuters, showed the net-long managed money in the market rising by just around $95 million to about $9.8 billion.
On Friday, U.S. crude oil notched at 9 percent gain.
Agricultural markets were among those that saw substantial gains in long money before the June 29 rally as prices had begun running up even earlier on worries about crop damage from hot weather.
Net-long managed money in corn rose by 52 percent — or $1.2 billion — to $3.5 billion. In soybeans, it was up 7 percent — or about $1.1 billion — to around to $17.1 billion.
(Reporting By Barani Krishnan; Editing by Bob Burgdorfer)