Larger harvests driving investors away from agriculture ETPs
September 2, 2014 7:59 am
Bumper crops in the US have ushered in the end of an investment binge in agricultural funds as prices continue to fall.
After raking in a higher amount of investments compared to energy and precious metal funds during the first five months of 2014, exchange traded products (ETPs) backed by agricultural commodities have recorded a net outflow of $57.7 million as of the end of the August. Inflows in funds that agriculture previously beat such as energy, industrial and precious metals, and broad based funds, meanwhile, surged to bring the amount of investments in raw materials up by 0.5% or $341 million.
Bear markets entered by commodities such as corn, wheat, soybeans, and cotton offset the large gains made this year by cattle and coffee. Outlook towards what analysts forecast to be a record harvest season have pushed down both bets for a rally in agriculture which have been reduced by 78% since the start of April and the cost of food which fell for the fourth consecutive month in July.
Founder of SummerHaven Investment Management Kurt Nelson says that, ““We’re coming up on what could be one of the biggest crop years ever. “There’s more certainty now about the success of the crop. It looks like we’re not going to have any surprises.”
Forecasts made by the US Department of Agriculture indicates that production of soybeans will reach a bumper crop of 3.816 billion bushels while corn will reach a record 14.032 billion bushels due to favorable weather in many planting regions. Futures for both crops have declined by 30% from their respective highs this year on top of hitting their lowest value in four years on the Chicago Board of Trade.
Data from the US Commodity Futures Trading Commission shows that since early April, the number of net long positions on 11 commodities under agriculture have fallen from a four year high of 1.1 million contracts for futures and options to the 248,335 contracts at the end of August.
The material has been provided by InstaForex Company – www.instaforex.com
Bumper crops in the US have ushered in the end of an investment binge in agricultural funds as prices continue to fall.
After raking in a higher amount of investments compared to energy and precious metal funds during the first five months of 2014, exchange traded products (ETPs) backed by agricultural commodities have recorded a net outflow of $57.7 million as of the end of the August. Inflows in funds that agriculture previously beat such as energy, industrial and precious metals, and broad based funds, meanwhile, surged to bring the amount of investments in raw materials up by 0.5% or $341 million.
Bear markets entered by commodities such as corn, wheat, soybeans, and cotton offset the large gains made this year by cattle and coffee. Outlook towards what analysts forecast to be a record harvest season have pushed down both bets for a rally in agriculture which have been reduced by 78% since the start of April and the cost of food which fell for the fourth consecutive month in July.
Founder of SummerHaven Investment Management Kurt Nelson says that, ““We’re coming up on what could be one of the biggest crop years ever. “There’s more certainty now about the success of the crop. It looks like we’re not going to have any surprises.”
Forecasts made by the US Department of Agriculture indicates that production of soybeans will reach a bumper crop of 3.816 billion bushels while corn will reach a record 14.032 billion bushels due to favorable weather in many planting regions. Futures for both crops have declined by 30% from their respective highs this year on top of hitting their lowest value in four years on the Chicago Board of Trade.
Data from the US Commodity Futures Trading Commission shows that since early April, the number of net long positions on 11 commodities under agriculture have fallen from a four year high of 1.1 million contracts for futures and options to the 248,335 contracts at the end of August.
The material has been provided by InstaForex Company – www.instaforex.com
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