(Aug 3): Hedge funds have turned predominantly bearish on commodities futures for the first time since 2016, showing increased pessimism on demand for raw materials amid economic slowdown fears. 

Money managers held a net position of almost 58,600 contracts used to bet on lower prices for a basket of 20 raw materials in the week ended July 30, according to US Commodity Futures Trade Commission data compiled by Bloomberg. For more than eight years — including the peak of the pandemic — investors had held a net bullish wager on prices. 

The reversal underscores mounting concerns about economic growth in China, which has for decades been the top demand engine, and ampler supplies of key commodities including corn and nickel. That has weighed on investor sentiment even as conflicts in Europe and the Middle East and this year’s rally in US stock prices have limited the price downside. The move was exacerbated by an algorithmic sell-off in the oil market. 

The Bloomberg Commodity Index, which tracks a basket of energy, crop and metals futures, is down 4% in 2024, reversing gains seen earlier this year. The gauge fell 13% in 2023, its biggest loss in five years.

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