JP Morgan: Historically large outflow of funds! Putting pressure on the holding value of the global commodities market.

On April 14, JPMorgan Chase released a report on the positions and fund flows in the commodity markets last week which showed that the estimated value of global commodity market holdings decreased by 3% in the week ending April 11, a reduction of $40 billion, to $13.9 trillion. Previously, the agricultural market experienced a historically large outflow of funds, and agricultural markets, despite good fundamentals and growth prospects amid economic recession, remain deeply affected by the crossfire of the US trade war. In addition, there were also outflows in the base metals, precious metals, and energy markets. The main points of the report are as follows: The estimated value of global commodity market holdings decreased by 3% ($40 billion) in the week ending April 11, falling to $13.9 trillion. Previously, the agricultural market experienced a historically large outflow of funds, and there were also outflows in the base metals, precious metals, and energy markets. Fund outflows based on contracts exceeded $45 billion that week, the largest outflow in this sector since the outbreak of the Ukraine war, mainly concentrated in the agricultural market. Short covering by investors and growth risks led to a $24 billion outflow in the agricultural market that week, while fund outflows in the base metals market were close to $10 billion. Although the US has reduced reciprocal tariffs to a general 10% and 145% for China within 90 days, our economists still believe that there is a 60% probability of a US/global economic recession by 2025. They emphasize that a sudden interruption in trade between the world's two largest economies would pose a threat to the global economy. As of April 11, the estimated value of net positions in the global commodity futures market decreased by 35.8% in the week, falling to $97 billion. Within this, nominal holdings in the precious metals sector decreased by 22% ($18.6 billion), falling to $65.5 billion; net long positions in the energy market decreased by 162% ($17.6 billion), falling to -$6.7 billion. Net positions of investors in the base metals market decreased by 41% ($12.7 billion), falling to $18.6 billion; meanwhile, net long positions in the agricultural market decreased by $4 billion, falling to $18 billion. It is expected that as of April 11, holdings in the precious metals market increased by $9.5 billion. The estimated value of energy market holdings decreased by $18.6 billion in the week (a 3% decrease). This decrease was mainly led by the crude oil and petroleum product markets, with net fund outflows from all types of traders reaching $2 billion, while the entire price curve continued to weaken. Our oil strategists have revised their Brent crude oil price forecast for 2025 from $73 per barrel to $66 per barrel (with West Texas Intermediate WTI revised from $73 to $62 per barrel), and the 2026 target price from $73 to $58 (WTI from $73 to $54 per barrel) due to increased trade policy uncertainty and changes in the reaction mechanism of the Organization of the Petroleum Exporting Countries (OPEC). With net fund outflows of $2.8 billion in the natural gas market for the week, and global natural gas prices further decreasing, natural gas market holdings decreased by $8 billion. Given the current "supply insecurity" in the US natural gas market, our natural gas analysts have raised the price forecast for 2025 to an average of $3.80 per million British thermal unit. The estimated value of precious metals market holdings increased by $9 billion in the week, reaching $23.6 billion (April 11). In terms of all types of traders, the net fund outflows based on contracts in this sector totaled $4.8 billion, mainly concentrated in silver ($2.9 billion) and gold ($1.9 billion). The net long positions of managed funds in the New York Mercantile Exchange (COMEX) gold futures (as of April 8) decreased by 8% in the week to approximately 131,000 contracts, at a level of 6/10 based on historical positions since 2018. Despite panic selling due to additional margin requirements to cover stock positions, the price of gold reached a new high this week. We believe this trend is supported by strong demand for safe-haven buying and the attractiveness of gold as a hedge against macroeconomic uncertainty. The estimated value of base metals market holdings decreased by 5% ($9 billion) in the week, falling to $16.7 billion (April 11). Net fund outflows based on contracts (all types of traders) were $9.7 billion, mainly concentrated in the copper market ($8.2 billion). As the US government temporarily suspended reciprocal tariffs for 90 days, base metal prices rebounded this week. As of April 11, the estimated value of environmental market holdings grew by 5.5% in the week, reaching $5.3 billion. The price of European Union Allowances (EUAs) rose by 1.6% in the week, having previously fallen to a 12-month low of just over 60 per ton. In the week of April 8, investment funds' net long positions in EUAs almost halved, decreasing by 14,496 contracts to 15,783 contracts, the lowest level since 2025. In the agricultural market, the estimated value of holdings fell sharply by 6% in the week, falling to $31.1 billion, the lowest level since October 2024. This was due to short covering in the grain market this week, as well as weakness in soft commodities and livestock prices. Net fund outflows, based on contracts, surged to a historic high of $24 billion, with grains and oilseeds markets seeing an outflow of $10.6 billion due to extensive short covering, while concerns about demand led to an outflow of nearly $7 billion in the soft commodities market and $6.8 billion in the livestock products market. Agricultural markets remain deeply impacted by the background of good fundamentals and the prospect of economic recession.Under such circumstances, Shenzhen Agricultural Power Group is still deeply entrenched in the crossfire of the US trade war. The US imposing tariffs on China, as well as China's retaliatory measures against American products, pose serious risks to the export of Shenzhen Agricultural Power Group in the 2025/26 crop season. The current trade situation increases the urgency for the US to reach an agreement with China before the new crops are launched in September/October 2025. Besides China, reducing reciprocal tariffs to below 10% for exports from the US Shenzhen Agricultural Power Group, especially for grain exports, is a significant positive development, provided there are no trade retaliation measures.This week, the overall trend of commodity prices in the market is mixed with joy and sorrow. The energy market prices are increasingly negative, the precious metals market prices are strong and upward, while the prices of base metals, grains, and oilseeds are slightly increasing. The short-term review of the price trend trading signal for silver on the New York Mercantile Exchange seems to have turned positive, while the short-term and long-term review trading signals for corn on the Chicago Board of Trade (CBOT) are close to turning positive. The short-term and long-term review trading signals for sugar No. 11 on the Intercontinental Exchange (ICE) have both shifted from negative to sell signals.