Silver and corn will probably be bought and cotton and natural gas sold in the reweighting of the Dow Jones-UBS commodity index, Macquarie Group Ltd. said.
Gold, soybean oil and arabica coffee may also be bought by funds linked to the index in January, Macquarie said in a report today. Assets under management of funds that track the index fell about 10 percent this year to $65 billion, it said.
The Standard & Poor’s GSCI gauge of 24 commodities dropped 5.5 percent this year, led by declines in corn and silver. The Dow Jones UBS index is rebalanced annually over several days depending on the price change in the past year to maintain diversified commodities exposure.
“As these funds purchase commodity futures, changes in their holdings have a direct impact on commodity markets,” Matthew Turner, an analyst at Macquarie in London, said in the report.
Silver’s 2014 target weighting will be 4.1 percent compared with 3.9 percent this year, while West Texas Intermediate will be lowered to 8.5 percent from 9.2 percent, S&P Dow Jones and UBS said on Oct. 31.
Silver futures dropped 28 percent to $21.86 an ounce on the Comex in New York this year. An estimated 6,000 silver contracts equal to 5 percent of open interest will be bought in the rebalancing, Macquarie said.
“Silver sees the largest forecast change as a percentage of open interest of any commodity in the index,” Macquarie said.
Gold will have the most weight in the Dow Jones-UBS commodity index next year, making up 11.5 percent compared with 10.8 percent in 2013, S&P Dow Jones and UBS said.