Have Commodity Fund Managers Left the Market?

This is an interesting graphic courtesy of RBC illustrating a large drop-off in managed money (CTAs, commodity pool operators, etc.) positioning in commodity futures:

 

Managed_Money_FuturesAfter reaching extremely high net long exposure earlier last year before the crude oil crash, managed money positioning has fallen off a cliff and moved down to a net neutral posture as of a couple weeks ago. The large leg lower in managed money exposure in recent months coincides with the multi-year low in the CRB (2nd lowest level since its inception) reached in March:

 

CRB

However, this also means that there wasn’t much managed money participation in the recent commodities bounce (led largely by crude oil) which may have ended this week.

Futures managed money virtually all utilize some form of trend following approach to trading; therefore, the large drop off in net exposure in recent months isn’t surprising given that many commodities are trend-less (gold, natural gas, etc.) while others are in a trend transition after an extended trending period (crude oil).

In summary, this data only serves to further confirm that commodities are very much an out of favor contrarian asset class until further notice.