Hedge funds bet wrong before biggest slump in 2012

Money managers increased net-long positions

Commodity Funds

Investors withdrew $357 million from commodity funds in the week ended May 2, according to data from Cambridge, Massachusetts-based EPFR Global, which tracks money flows. Gold and precious-metals outflows totaled $349 million, Cameron Brandt, the director of research, said by phone.

Speculators raised bets on higher crude-oil prices by 12 percent to 219,817 contracts, the biggest gain since Feb. 14, the CFTC data show. Crude oil declined 6.1 percent in New York last week, the most September.

U.S. crude stockpiles increased 2.84 million barrels to 375.9 million in the seven days ended April 27, the most since September 1990, according to an Energy Department report May 2. Domestic output gained 8,000 barrels a day to 6.12 million, the highest level since November 1999.

Wagers on copper increased sevenfold to 15,582, as prices slumped 2.7 percent, the first weekly drop in three. Bullish gold bets climbed 7.9 percent to 116,061, a four-week high. Bullion slumped 1.2 percent in New York last week on speculation that the Fed will be reluctant to buy more debt to shore up growth, easing concern that inflation will accelerate.

Chicago Futures

A measure of net-longs for 11 U.S. farm goods rose 0.1 percent to 512,512 contracts, the CFTC said. Corn holdings climbed 9 percent to 112,328, the biggest increase since March 6. Futures in Chicago dropped 0.8 percent last week, leaving prices down 4.1 percent this year.

Global food costs fell for the first time this year in April, the United Nations’ Food & Agriculture Organization said on May 3, and prices are down 10 percent from the all-time high reached in February 2011.

“Agriculture and other energy type commodities will most likely be dragged down due to concerns on slow growth of the U.S. and negative growth in Europe,” said Stephen Hammers, the Nashville, Tennessee-based chief investment officer at Compass EMP Funds, which manages about $1 billion of assets. “News is not expected to be as bright as it was last quarter.”

Bloomberg News

--Editors: Millie Munshi, Steve Stroth

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