Hedge Funds Pull Back From Commodities

Dec 17 2012 | 11:46am ET

Hedge funds and other investors cut their commodity bets last week amidst growing fears about the U.S.'s fiscal cliff.

While a potential breakthrough came this weekend, when U.S. House Speaker John Boehner tentatively agreed to some tax increases, last week was dominated by uncertainty and a warning from the Federal Reserve. That helped push money manager's bets on 18 futures and options down 11% in the week ended Dec. 11. The 802,817 contracts owned by hedge funds and others is the lowest number in a month, the U.S. Commodities Futures Trading Commission said.

Sugar took a particularly big hit, with a 68% drop in holdings. Wheat contracts dropped 67% to their lowest level since June, and oil holdings fell 21%. Contracts on 11 farm goods fell 9.6%.

Gold holdings, by contrast, rose 3%.

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