This year’s price declines are exaggerated, and investors should buy, Goldman Sachs Group Inc. said in a March 7 report, raising its outlook for raw materials to “overweight” from “neutral.” Goldman ranked No. 1 in commodities revenue in 2012, according to analytics company Coalition.
Gold holdings rose 9% to 43,195 contracts as of March 12, after dropping 27% the previous week, according to the CFTC. The price advanced 1% for the week, the biggest gain in two months, as investors sought a hedge against accelerating inflation.
The U.S. consumer-price index rose 0.7% in February, more than forecast, after retail gasoline surged, the government said March 15. Crude-oil futures rallied 1.6% last week, the most since Feb. 1, and touched $93.84 a barrel in New York on March 15, the highest in almost three weeks.
Net-longs for agricultural products surged 73% in the week ended March 12 to 243,238 contracts, the first increase in five weeks, according to the CFTC.
Cotton holdings rose 12% to 67,632 contracts, the highest since September 2010. Prices climbed to an 11-month high of 93.93 cents a pound on March 15 in New York on speculation that China, the largest buyer, will boost imports just as supply tightens in the U.S., the biggest exporter.
Bets on higher corn prices rose to 87,671 contracts in the biggest weekly gain since July, according to the CFTC. Futures on the Chicago Board of Trade gained 1.9%. Soybean net- long holdings advanced 8.6% to 139,344 contracts, the highest since November.
Speculators also trimmed bearish holdings in sugar by 75%, leaving a net-short position of 11,540 contracts, according to the commission, while the price rose 0.7% for the week. Wheat net-shorts narrowed by 10% to 41,519 contracts, before prices advanced 3.7%.
Investors may be purchasing commodities after prices declined earlier this year, said Adrian Day, who manages about $170 million of assets as the president of Adrian Day Asset Management in Annapolis, Maryland.
“Good economic news, particularly in the U.S., and improved sentiment in Europe has driven” the rebound, said Day. “A lot of money came out of commodities at the beginning of this year and went into equities. There are always some fund managers who are value-oriented, so the decline in commodities has been long enough that it may get more people to move, particularly if there’s good economic news.”