Tag Archives: commodity market

Commodity hedge funds bear longest losing streak on record

19 Jul

Funds betting on commodity price moves have lost money every month since January, their joint longest losing streak on record, raising more doubts about their ability to make money at a time when the commodity “supercycle” may be over.

The average fund slid 3.58 percent in the first six months of the year, according to a widely watched Newedge commodity index. Funds have only suffered five consecutive losing months once before, in 2002-2003, the index shows.

Hedge funds market themselves as capable of making money in all markets, yet funds trading commodities as varied as gold, grains and gas, have failed to turn an annual profit in the last three years.

The weak performance will put more pressure on the industry to lower fees and introduce clawbacks, which enable investors to reclaim some performance perks paid to hedge fund managers in boom times if the returns they hope to achieve fail to continue.

Worries about cooling demand in key markets like China, and a huge shift in the supply-side from shortage to glut, has sent prices tumbling in recent years, and left many warning that the end of the commodity “supercycle” – the long period of rising commodity prices – is here.

“Historically most of these funds have been a levered beta play on the commodity cycle, or in some cases arbitrageurs of commodity spreads,” Michele Gesualdi, portfolio manager at hedge fund investor Kairos, said.

“The end of the supercycle has hurt the first area, while the volatility and discrepancies that have arisen in forward markets have made life difficult for the second.”

Adding to the sector’s woes, hedge funds which trade other asset classes such as equities have rebounded this year, including those that trade mining and energy shares.

The USD 1 billion fund of Clive Capital, a firm which trades oil and ran about USD 5 billion at its peak, is down 3.5 percent to June 28, performance data shows. Krom River’s Commodity Fund has lost 4.4 percent to end-June, while Brevan Howard’s Commodities Strategies Fund is off 2.5 percent to June 28.

Krom River’s chief executive Itay Simkin said that despite falling prices, commodities were still a very good investment due to production problems, urbanisation, decent economic growth rates and a lack of forward investment in mining.

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Other funds mentioned in this story either declined to comment or could not immediately be reached for comment.

Funds trading bullion are nursing some of the heaviest losses. Gold has tumbled this year on expectations the U.S. Federal Reserve will cut back on its money-printing programme, which had driven gold to record highs.

John Paulson, the billionaire U.S. investor, has seen his gold fund, his smallest with USD 300 million in assets, plunge 23 percent in June and is down 65 percent this year.

Despite the losses, most managers are not down as much as commodity prices this year – the 19-commodity Thomson Reuters-Jefferies CRB index fell 5.7 percent through end-June.

Some have also shone. After losing 30 percent in 2011 and 7.6 percent and a big chunk of his assets in 2012, Mike Coleman’s Merchant Commodity Fund is up 24.2 percent this year.

But the bigger concern for commodity funds is proving they can consistently make money amid a sustained downward trend in prices.

The problem, investors and managers say, is that the long, gradual trend of rising prices has been replaced with shorter, more uncertain trends, in which prices can plunge suddenly, making it difficult to profit from their slide.

Commodity prices, down 22 percent from a 2011 peak, have entered bear market territory, while volatility – which some funds thrive on – has also fallen, challenging managers further.

Natural gas drops as supplies rise in line with expectations

31 May

Natural gas prices dropped in U.S. trading on Thursday after official data revealed U.S. supplies grew in line with expectations.

In the New York Mercantile Exchange, natural gas futures for delivery in July traded at USD4.021 per million British thermal units, down 3.91%.

The commodity hit a session low of USD4.013 and a high of USD4.184.

The U.S. Energy Information Administration said in its weekly report earlier that natural gas storage in the U.S. in the week ending May 24 rose by a healthy 88 billion cubic feet, broadly in line with market expectations.

Read more: Natural gas drops as supplies rise in line with expectations.

Silver prices today: Updates on Silver rates in India

29 May

Spot silver prices of 999 purity were trading weak in major metros of India. However, silver prices on MCX were trading slightly higher.

At 14:50 hrs MCX Silver July contract was trading at Rs 43352 up Rs 90, or 0.21 percent. The Silver rate touched an intraday high of Rs 43468 and an intraday low of Rs 43126. So far 12100 contracts have been traded. Silver prices have moved down Rs 21658, or 33.31 percent in the July series so far.

Mumbai

Spot silver 999 prices shed by Rs 145 at Rs 45000 per one kilogram.

Ahmedabad

Spot silver 999 prices fell by Rs 85 at Rs 43750 per one kilogram.

Chennai

Spot silver 999 prices advanced by Rs 200 at Rs 43900 per one kilogram.

Delhi

Spot silver 999 prices were down by Rs 60 at Rs 43940 per one kilogram.

Jaipur

Spot silver 999 prices slipped by Rs 100 at Rs 43800 per one kilogram.

 

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Trading tips for nickel, copper, crude & silver

28 May

Commodity-trading

Sumeet Bagadia of Destimoney Commodities recommends selling nickel. “Rise in prices till Rs 830 per kilogram in MCX should be used as selling opportunity with a stop loss to be placed at Rs 845 per kilogram on higher side for initial target of Rs 810 per kilogram and if prices are able to break and give close below Rs 810 per kilogram then further selloff can be seen till Rs 790 per kilogram in next two-three days,” Bagadia adds.

Priyank Upadhyay of SSJ Finance & Securities suggests buying silver around Rs 43,300 per kilogram with stop loss below Rs 42,700 per kilogram and target around Rs 44,000 per kilogram followed by Rs 44,500 per kilogram.

Hitesh Jain of IIFL advocates selling copper June contract around Rs 407.50 per kilogram with target of Rs 402 per kilogram and stop loss of Rs 411 per kilogram.

Sreekanth Jha of PJ Commodity Ventures advises selling crude at Rs 5,250 per barrel and look at covering at Rs 5,100 per barrel.

 

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MCX Gold August contract trades lower

24 May

MCX Gold August contract was trading at Rs 26550 down Rs 94, or 0.35 percent. Gold prices have moved down Rs 5677, or 17.62 percent in the August series so far.

Gold prices on MCX were trading mixed. At 11:13 hrs MCX Gold June contract was trading at Rs 26373 down Rs 67, or 0.25 percent. The Gold rate touched an intraday high of Rs 26537 and an intraday low of Rs 26366. So far 5258 contracts have been traded. Gold prices have moved down Rs 5821, or 18.08 percent in the June series so far.

mcx gold news

MCX Gold August contract was trading at Rs 26550 down Rs 94, or 0.35 percent. The Gold rate touched an intraday high of Rs 26725 and an intraday low of Rs 26546. So far 777 contracts have been traded. Gold prices have moved down Rs 5677, or 17.62 percent in the August series so far.

MCX Gold October contract was trading at Rs 26718 up Rs 72, or 0.27 percent. The Gold rate touched an intraday high of Rs 26867 and an intraday low of Rs 26707. So far 35 contracts have been traded. Gold prices have moved down Rs 5132, or 16.11 percent in the October series so far.

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