ETF Securities Associate – Commodity and Equity Strategist, Aneeka Gupta, has commented on the firm’s 2015 review of commodities.
“2015 will be remembered as one of the most volatile years for commodities, facing the repercussions of a structural slowdown in China, rising geopolitical risks and the Volkswagen emissions scandal,” she writes.
“ Assets under management in commodity ETPs ended the year lower owing to a significant price impact of -20 per cent and a meagre -1 per cent of flows. Redemptions in gold ETPs were the largest sector contributor to the decline in AUM. In contrast, energy ETPs continued to accumulate assets, as investor inflows surged by 407 per cent, more than offsetting the energy price decline,” Gupta says.
“In terms of broad sector commodity ETP flows, the contrast between 2014 and 2015 is striking. Precious metal and energy ETP flows more than outpaced the prior year. It has to be noted that energy ETP creations rose by 147 per cent in 2015. Meanwhile, industrial metal ETP flows fell by 210 per cent compared to 2014, owing to concerns surrounding a slowing Chinese economy.
“Few commodities were able to escape the global commodity market rout in 2015 and most of those that did saw price increases due to the positive effects of the El Nino-related weather problems. Agricultural commodities led by cocoa, cotton and sugar earned the top spots on the league table for best performing commodities in 2015. Sugar recorded a price rise of 32 per cent from 23 Sep 2015 to the end of the year owing to the ongoing wet weather in Brazil, the El-Nino related drought in India in the summer and production problems in Thailand. On the other hand the strong El-Nino was responsible for the record warm December experienced across the United States and Europe and added to downward price pressure in the energy sector in the second half of 2015.
Gupta reports that stock-exchange traded turnover in commodity ETPs started the year at a record high of USD4.6 billion with energy ETPs remaining the key driver. However, this level tapered off over the year and peaked again in July owing largely to precious metal ETPs. Gold suffered the largest turnover as market sentiment towards the yellow metal started to wane in response to rising lead indicators of growth in US and Europe coupled with net long positioning in gold falling to its lowest level since June 2013.