This means that hedge funds have effectively cut their bets on commodity prices rising further. During the week ended November 1, hedge fund managers cut their net long positions by 3.9 per cent to 798,787 contracts.
Prices of majority of commodities fell last week with cotton posting a decline of 5.4 per cent, aluminum declining by 4.6 per cent and nickel going down by 4.1 per cent.
However, the commodity on which hedge funds are most bearish is soybean.
Hedge fund managers have become bearish on the prices of commodities because they expect that the continuing European economic crisis will take its toll on the demand for commodities eventually.
Any decline in the price of commodities is good news for countries like India which are battling inflation. The high commodity prices during much of this year were one of the main drivers of inflation in India.
Dion Global Solutions Ltd