Fund Managers Commodity Positioning // Cocoa’s Historic Run Continues…
The Commodity Report #147
Fund Manager Positioning
In March fund managers added to their energy position but reduced overall commodities like grains, softs and metals on a MoM basis — the latest BofA survey shows. Investors have been underweight commodities now for the past 4 months (longest underweight streak since Aug'19)
Compared to the past 20-year z-score, fund managers remain heavily underweight in commodities and even more in energy.
Cocoa’s Historic Run Continues…
“I don’t think there’s anyone out there who can predict where this train will stop with a straight face, just because of how unprecedented this kind of rally is,” said John Goodwin, a senior commodity analyst at ArrowStream to Bloomberg last week.
West African growers have battled extreme weather — from heavy rain to heat and dryness — and crop disease that has ravaged harvests. Bean arrivals for exporting from ports in top grower Ivory Coast are almost 30% behind last year’s pace and the International Cocoa Organization forecasts a third straight global deficit this season. We highlighted these issues in a previous newsletter.
While it’s unclear exactly who has been driving prices higher, the reduced speculative interest indicates that physical buyers may have played a key role.
We currently do not touch this market. The short squeeze continues and therefore the market remains unpredictable. Like with every short squeeze - big money also can be made once the momentum fades and futures spreads start to signal divergences - so far that’s not the case though. We’ll keep premium members updated once we see market dynamics start shifting again.
Bitcoin Halving Event is near
Bitcoin Halvings are best understood as supply shock - historical Halving events were followed by very significant price appreciations in the past. The quantitative analysis suggests that the performance differences 100 days after the Halving are so significant that it is unlikely to be random, as this analysis by the ETC group shows.
The results suggest that the performance difference after 100 days after the Halving has been so significant that it is unlikely to be random and pure coincidence. The group suggests that Bitcoin’s equilibrium price could increase to 103k USD by the end of 2024, to 172k USD by the end of 2025 and ultimately to 215k USD by the end of the next Bitcoin epoch in 2028.
In Other News…
MArket participants have priced in one 25bps rate cut by July and three for the year, as this chart by Ole Hansen shows.
This week look out for the following:
Durable Goods data as well as the Richmond Manufacturing Index on Tuesday
GDP print on Thursday
Core PCE Price Index on Friday
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Till next Monday, Lukas
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