Commodity Assets at Record $412 Billion in March, Barclays Says
Commodity assets under management rose to a record $412 billion in March, led by the biggest ever jump for agriculture products, Barclays Capital said.
Investment flows into raw materials for the first quarter totaled $16.8 billion, with $7.1 billion added to agriculture and $6.8 billion to energy, Barclays analyst Roxana Mohammadian Molina said in a report e-mailed today. Precious metals got $300 million, the smallest ever, Barclays said.
Commodities represented by the Standard & Poor’s GSCI Total Return Index of 24 raw materials climbed 4.4 percent in March, trading at a two-year high, led by gains in cotton, energy, silver, live cattle and corn. Pricier food contributed to riots across north Africa and Middle East this year, toppling leaders in Egypt and Tunisia and leading central banks from Brazil to China to raise interest rates.
“This is precisely the time to hold on to your commodity portfolios,” Molina said by phone from London. “You have strong fundamentals, you have geopolitical risks and then you have the fact that equities are pricing in slower growth ahead and this is not happening in commodities because commodities tend to outperform in the later stage of the economic cycle.”
Oil’s biggest advance in two years led commodities to a third straight quarterly gain in the first quarter as political turmoil erupted in the Middle East and north Africa, while stocks were curbed by Japan’s strongest earthquake on record.
“Oil and food prices are already at levels that are raising inflation fears and by implication, threatening the performance of other assets,” Molina wrote in the report.
Barclays said it was again betting on higher corn prices, because of increased demand for ethanol made from the grain and expanding imports from China. It’s too early to bet on higher copper prices while nickel will probably gain on increased stainless steel production in the second quarter, Barclays said.
Commodity inflows for the first quarter were down $5.9 billion from the fourth quarter, Barclays said. Agriculture was the only sector with higher inflows from the previous quarter, it said.
In March, the inflows were $5.6 billion, down from $7.3 billion in February, Barclays said. Precious metals added $1.9 billion in March, followed by $1.8 billion into agriculture, $1.2 billion into energy and $700 million in industrial metals, Molina said.
“In January, we saw the largest outflow for precious metals, and this weakness continued into February and now in March the trend reversed,” she said.
To contact the editor responsible for this story: Claudia Carpenter in London at firstname.lastname@example.org
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