Investors are bailing from commodity funds in the fastest pace on record, and the exodus shows no signs of ending.
U.S. exchange-traded funds linked to broad baskets of raw materials saw a net outflow of $919 million over the first three months of the year, probably the most of any quarter because the securities are intended in 2006, data published by Bloomberg show. Bank of the usa Corp. says ample supplies have unleashed price wars, and Goldman Sachs Group Inc. predicts a 20% drop for commodities already near a 13-year low. Morgan Stanley and Societe Generale SA also provide cut forecasts for a whole selection of items.
Rising supplies created bear markets over the past year as drillers unlocked more oil and gas, copper mines expanded and farmers harvested record corn and soybean crops. The strongest dollar in at least a decade encouraged countries with weaker currencies to export more. As the U.S. economy is strengthening, Europe continues to be contending with its debt crisis and growth is slowing in China, the very best user of everything from iron ore to pork.