Thu, Aug 25, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Opalesque Futures Intelligence

Index Tracker: Commodity Index Investing Data: Dramatic Growth in Gold and Agriculturals.

Friday, April 29, 2011

Commodity Index Growth
By Chidem Kurdas

There has been dramatic growth in index-related commodity investments over the past two years. In particular, investments in gold and certain agricultural commodities like corn have expanded substantially, as the table below shows.

The Commodity Futures Trading Commission collects information on index investing in commodity markets. For this purpose, the investors include index funds, swap dealers, pension funds, hedge funds and mutual funds. Exchange-traded funds and exchange traded notes are  part of the index activity.

These participants use both direct investments in futures markets and indirect investments through over-the-counter swap agreements with financial firms. The CFTC obtains information about both activities. For OTC agreements, the Commission uses "special call" requests for details of firms' market positions in physical commodity futures.

The data below is the notional value of futures contracts for all US markets with more than $0.5 billion of reported net notional value of index investment at the end of any one month.

Index Investment Growth

 Notional Value of Futures Contracts, Net billions of $

  Feb. 28, '11 Dec.31, '10 Dec.31. '09 Dec. 31, ‘08
Total, US and Non-US  232.7 211.1 159.9 82.2
Selected US Futures: 47.3 41.7  36.4 20.1
WT1 Crude Oil        
Gold  16.7 14.9 8.4 6.1
Natural Gas 16.5 14.6 14.7 7.1
Corn 15.6 13.8 6.9 5.0

SOURCE: Commodity Futures Trading Commission, various reports

Gold  is an outstanding example. Index-related gold futures activity - as defined above - fell from 2007 to 2008, reflecting the unusual circumstances at the time. By the end of 2009, conditions were more normal. From then to the time of the latest data release  at the end of February 2011, the notional value of gold contracts approximately doubled.

This year gold futures have been the largest sector  after crude oil, whereas in the past other commodities like natural gas drew far more activity than gold.

For a discussion of possible adverse effects from the inflow of capital into futures markets, see this issue's Inside Talk with Mack Frankfurter.



 
This article was published in Opalesque Futures Intelligence.
Opalesque Futures Intelligence
Opalesque Futures Intelligence
Opalesque Futures Intelligence
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Asia - LGT Capital Partners: Alternatives set for continued rise in Asia[more]

    From Asianinvestor.net: More flows are likely into insurance-linked strategies, private equity and trend-following strategies/CTAs, given the benefits of such investments, argues LGT Capital Partners. Despite the numerous quantitative easing programs and bailouts of recent years, the quest for

  2. LatAm hedge funds surge in 1H to +24.4%, emerging markets assets rise[more]

    Komfie Manalo, Opalesque Asia: Hedge funds investing in Latin America posted strong gains through mid-2016, reversing declines in four of the past five years, including the last three years, to lead all areas of hedge fund performance through the first half of 2016, according to the latest HFR Em

  3. Investors yank money from hedge funds after poor performance[more]

    From Marketwatch.com: A growing exodus from hedge funds extended to two of the biggest names in the industry Tuesday, Tudor Investment Corp. and Brevan Howard, as disenchanted investors increasingly shun what was once the hottest place to put money. The funds’ problem is clear: They just aren’t perf

  4. Banks look at hedge funds differently - and it should matter to allocators[more]

    From Valuewalk.com: Looking at two bank reports on the same topic can often yield interesting results. There are times when bank research is best viewed from the standpoint of how their analysis does or does not correlate with one another. Regarding hedge fund allocation decisions, one bank appears

  5. Legal - Hedge fund’s fixer kept deals flowing with bribes, U.S. says, Big four banks sued by U.S. hedge funds over BBSW, Lessons for hedge fund managers from the government's failed prosecution of alleged insider trading[more]

    Hedge fund’s fixer kept deals flowing with bribes, U.S. says From Bloomberg.com: With the Miami villa, stopovers at New York’s Plaza Hotel and millions channeled in bribes to win mining deals, Samuel Mebiame was the relationships guy in a corruption scheme that spanned continents, accord