Hedge funds reduced bets on higher commodity prices for the first time in seven weeks after China cut its growth target, just as prices rallied on signs the U.S. economy is improving and Greece is containing its debt crisis.
Money managers reduced combined bullish positions across 18 U.S. futures and options by 1.1 percent to 1.17 million contracts in the week ended March 6, Commodity Futures Trading Commission data show. Investors cut bets on copper by the most in two months and those on oil by the most since December. China uses more copper and energy than any other nation.
Commodities fell 1.5 percent in the week ended March 6, a day after China cut its economic-growth target to 7.5 percent, from 8 percent, the lowest since 2004. Prices rebounded 2.1 percent in the following three days, extending this year’s advance to 9.7 percent, as Greece and bond investors agreed to the biggest sovereign restructuring in history and the U.S. added more jobs than economists were expecting.
“The economy is looking better, and there’s a general risk-on kind of sentiment,” said Mihir Worah, who manages Pacific Investment Management Co.’s $22 billion Commodity Real Return Strategy Fund from Newport Beach, California. “How do I think investor sentiment is? Certainly, they’re voting with their money, and we’re seeing steady inflows into our funds.”
