This summary highlights positions and changes made by speculators such as hedge funds and CTA's across commodities, forex, bonds and stock index futures and options up until last Tuesday, December 29. A general quiet holiday impacted week, which nevertheless saw speculators increase bullish commodity bets to a record 2.5 million lots representing a nominal value of $125 billion.
The Bloomberg Commodity Index traded higher by 0.7% higher during the reporting week thereby supporting a strong yearend finish for the commodity sector. A sector which took a 26% pandemic-led hit during the first quarter before spending the belly part slowly recovering before sprinting into yearend on vaccine optimism, a weaker dollar and emerging focus on reflation trades.
These developments have all helped create a much improved environment for a sector which has not been part of the strong rally seen across other asset classes during the past decade. From an investment perspective and using the Bloomberg Commodity Total Return Index, the sector suffered a 64% slump between the 2011 peak up until the low point last March, which for the index was the lowest in more than 20 years.
Speculators have responded very forcefully to the improved sentiment during the past six month and as we enter 2021 they hold a total net long across 24 major commodity futures of 2.5 million lots, representing a nominal value of $125 billion. While the two previous peaks in 2017 and 2018 were primarily led by the crude oil market, the chart below shows how bullish bets have been spread out more evenly between the three major sectors of energy, metals and agriculture.