In response to the bumper crop year, rising oil output and slowing global demand for raw materials, commodity exchange traded funds experienced their largest monthly outflows this year.
In September, commodity ETFs experienced $1.05 billion in outflows, the largest monthly withdrawal since December, and saw more money redeemed for commodity-backed ETFs for the month than in the combined nine months of the year, reports Luzi Ann Javier for Bloomberg.
The PowerShares DB Commodity Index Tracking Fund (NYSEArca: DBC), the largest commodity-related ETF, which tracks a broad basket of the 14 most heavily traded commodities, saw $107.2 million in outflows over September, according to ETF.com data.
Net redemptions were led by outflows from precious metals and energy. For instance, the SPDR Gold Shares (NYSEArca: GLD) saw $986.2 million in outflows and the United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate oil futures, shrunk by $115.8 million.
Investors yanked $776.6 million from precious metals-related ETFs over September. However, traders have remained surprisingly optimistic over silver, adding $338.9 million into iShares Silver Trust (NYSEArca: SLV). [Gold ETF Holdings Continue Dwindling]
Money managers have been cutting back their bullish bets across 18 U.S. traded commodities for 13 consecutive weeks as rising supply, a strengthening U.S. dollar and falling demand weighed on the space.
“Demand has been tepid, more so than people expected, particularly for the crude-oil market, which is awash in supply,” Aakash Doshi, an analyst at Citigroup Inc., said in the article. “On the grain side, we’re seeing very strong Northern Hemisphere supply. On metals, there are concerns about China.”
U.S. farmers are harvesting a bumper crop year, with record corn and soybean crops. The Teucrium Corn Fund (NYSEArca: CORN) and the Teucrium Soybean Fund (NYSEArca: SOYB) are off 25.5% and 16.1%, respectively, year-to-date. [Record Harvests Chase Investors From Agriculture ETPs]
Additionally, U.S. crude oil product is at its highest since 1986 as new hydraulic fracturing techniques help extract oil from shale beds. USO has dropped 11.5% over the past three-months and is down 2.6% year-to-date. [Taking A Bearish Approach to Oil ETFs]
For more information on ETF flows, visit our ETF performance reports category.
Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own shares of GLD.