After dragging through one of their worst months since May 2012, the commodities market and related exchange traded funds can still find some pockets of strength as seasonal trends start kicking in.
The widely watched S&P GSCI index fell 5.3% over July as energy and agricultural commodities pressured the broader market, reports Alex Rosenberg for CNBC. [Commodity ETFs in Rough Patch as World Bank Turns Bearish]
Specifically, the uncertainty surrounding Libya weighed on oil prices, and agricultural commodities declined almost 9%, touching the lowest level in four years on ideal weather conditions and better supply outlook. Over the past month, the United States Oil Fund (NYSEArca: USO) fell 6.9% and PowerShares DB Agriculture Fund (NYSEArca: DBA) declined 2.6%.
Additionally, the appreciating U.S. dollar did not help out – the U.S. dollar and commodities typically show an inverse relationship.
Nevertheless, Jodie Gunzberg, global head of commodities at S&P Dow Jones Indices, argues that the current weakness in the space will dissipate.
“The important thing is that inventories didn’t build up all of a sudden,” Gunzberg said in the article. “It’s more of a temporary drop from a good crop and what’s happening right now with energy.”