Agriculture Sees Largest Inflows in Nearly a Year; Gold Sold as Perceptions of Euro Risk Fall …
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· Agriculture ETCs see largest inflows in 11 months. Inflows into ETFS Agriculture (AIGA) totalled over $60mn last week, the largest inflows on ETFS’ commodity platform and the largest inflows in nearly a year.
After experiencing weak performance for most of 2010, grain prices have been boosted recently as poor growing conditions in Europe and Russia have offset the improved growing conditions in the US. Unlike most commodities, grain prices are still below year ago levels. Softs prices have been mixed with ETFS Coffee up 17% and ETFS Sugar down 38% YTD for example. Agriculture ETCs have seen some of the steadiest inflows this year as the sector tends to have a low correlation to the business cycle and other asset classes, providing diversification benefits for more conservative investors.
· ETFS Copper (COPA) sees nearly $10mn of inflows, the largest in three-months. Strong gains were exhibited across the base metal complex last week, as investors embraced risk appetite on the back of better than expected European bank stress tests and positive US earnings Q2 earnings surprises. While flows into COPA suggest growing risk appetite, so too do the outflows in ETFS Short Copper (SCOP) – investors withdrew over $20mn from SCOP, the largest in two months.
· Energy ETCs see positions trimmed as oil nudges $80 per barrel. Long Oil ETCs saw their first
withdrawals in a month as investors appear to be continuing to trade the $70-85 per barrel range. While shortterm supply side developments are likely to remain supportive (hurricanes and the impact of the BP oil spill in the Gulf of Mexico), investors have begun to reduce positions as oil prices hover just under the $80 per barrel level.
· Precious metals see largest outflows since March as investors sell gold on improved sentiment
towards Europe. Precious metal ETCs saw around $110mn of outflows last week, with European listed gold ETCs making up 54% of the outflow. With the European banks stress tests having passed without major mishap, European macro data looking slightly better and the Euro strengthening, it appears that some of the shorter-term safe haven flows into gold are leaving. However, gold ETC outflows remain modest compared to the nearly $1.5bn of net inflows so far this year and long term investors appear to be holding their positions.
Source: ETFWorld – ETFSecurities
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