First drop in 6 weeks in hedge funds commodity longs

Fri Sep 28, 2012 7:09pm EDT
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By Barani Krishnan

NEW YORK (Reuters) - Hedge funds and other big speculators have pulled more than $5 billion from U.S. commodity markets, cutting their net long position for the first time in six weeks after sending oil, metals and crop prices to multimonth highs, trade data showed Friday.

The profit-taking in the week to September 25 was the biggest in four months by the so-called "money managers" in commodities, according to data issued by the Commodity Futures Trading Commission (CFTC) and calculated by Reuters.

It was the first major snap in managed money net longs that had built up since early July in anticipation of stimulus measures from the Federal Reserve and the European Central Bank.

In that period, hedge funds and other speculators pumped about $30 billion into U.S. commodities, by Reuters' estimates, creating new bullish milestones in crude oil, gold, copper and soybean prices.

Reuters' calculations of the CFTC's Commitment of Traders data showed the value of the net long position held by money managers in some 22 U.S. commodity markets fell to $112.3 billion in the week to September 25, from $117.8 billion in the week ended September 18.

The figures are calculated by Reuters based on the change in net positions from a week ago, multiplied by the contract's value at the end of the period. Because most investors trade commodities on margin, the change in the value of positions is not directly equivalent to total investment.

In contract terms, the decline during the week to September 25 was 87,955 contracts, or nearly 6 percent lower from the previous week.