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Commodities & Metals

Speculators Pulling Out of Commodities

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By Paul Ausick Updated Published
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Mining

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Rising stockpiles of virtually every commodity had led to a sharp drop in long-dated noncommercial (speculative) futures. Slowing growth in the United States and elsewhere is getting the blame for the 31% drop in net long positions.

Big iron ore miners like Vale S.A. (NYSE: VALE), Rio Tinto PLC (NYSE: RIO) and BHP Billiton Ltd. (NYSE: BHP) have cut capital spending on new production, but they may find that they must pull it in even more. Silver producers like Coeur d’Alene Mines Corp. (NYSE: CDE), Pan American Silver Corp. (NASDAQ: PAAS) and Hecla Mining Co. (NYSE: HL) have struggled with low silver prices for the past two quarters or so.

According to a report at Bloomberg, the Commodities Futures Trading Commission (CFTC) said silver, rubber, and corn turned short in the week ending April 2. We noted several issues with corn last week, including more U.S. planting this year and larger stockpiles. But silver has plunged as well, to levels near a bottom posted last July just above $26 an ounce.

Crude oil, iron ore, copper, aluminum — it is difficult to find a commodity that is expected to be in short supply. And stockpiles are expected to continue rising, putting even more pressure on prices.

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About the Author Paul Ausick →

Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.

He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.

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