The commodities rout that knocked off $99 billion of market
value last week is driving out speculators and leading Goldman Sachs Group
Inc., which forecast the plunge, to predict a possible recovery.
The combination of slower growth in U.S. service industries
and fewer German manufacturing orders helped drive the Standard & Poor’s
GSCI Index of 24 commodities down 11 percent in five days, the most since
December 2008, and erased all the gains since mid-March. Wheat, zinc and gold
rebounded at the end of the week as U.S. payrolls exceeded economists’
forecasts, reducing concern that demand will weaken.
“Given the magnitude of the pullback, it does create an
opportunity for more upside potential, particularly in the second half of this
year, when fundamentals are expected to tighten,” Jeffrey Currie, the
London-based head of commodity research at Goldman, said in a May 6 interview.
A month ago, Currie told investors they should be “underweight” in commodities.
“In the very near-term, we’d be a little cautious,” he says now.
The value of all 24 commodities tracked by the S&P GSCI
index was about $805 billion on May 6, compared with $891 billion on April 29,
according to data compiled by Bloomberg on the number of outstanding contracts
and prices of futures closest to delivery. Combined holdings of exchange-traded
products backed by precious metals fell to $119 billion from $132 billion, the