“We are going to reengage within the oil markets as soon as we get hold of higher readability on the provision aspect,” the letter stated.
The pivot comes because the agency recovers from a report loss final yr, ending a three-year profitable streak, as bullish predictions on oil markets went awry. This yr by Might, the Andurand Commodities Fund climbed about 22%, whereas the riskier Andurand Commodities Discretionary Enhanced fund soared about 63%, in accordance with the letter.
Andurand Capital Administration declined to remark.
Final yr, Andurand predicted a surge within the oil market to as excessive as $140 a barrel by the top of 2023. As an alternative, Brent, the worldwide benchmark, by no means crossed the $100 mark, leaving bullish commodity buying and selling homes annoyed as OPEC+ provide cuts did not turbo-charge costs.
The Group of Petroleum Exporting International locations in June agreed to progressively wind down about 2 million barrels a day of manufacturing cuts beginning in October. “This determination, together with the assorted indicators we use to trace the oil market, lead us to view the present market setup as blended,” Andurand’s agency stated within the letter.
In Might, the agency’s efficiency fluctuated in keeping with copper costs, and lengthy publicity out there contributed to nearly all of the corporate’s threat in its commodity hedge funds, in accordance with the letter.
Copper traded in London jumped as a lot as 30% this yr to succeed in a report in Might, however has since retreated shut to fifteen% from the excessive. Many analysts count on copper provides will path demand within the years forward because the metallic is utilized in electrical grids that might be expanded as a part of the transition to scrub vitality.
“We proceed to imagine that we’re in the beginning of the copper bull-market and that the latest strikes mark solely the start,” the agency stated within the letter. “Larger costs include elevated volatility, however we proceed to count on copper to maneuver considerably greater over the following decade to incentivise new provide.”
Within the letter, the agency cited a “decade-long provide crunch” for the metallic.
The agency additionally stays “very satisfied” in its “lengthy cocoa thesis,” noting tight provides and stronger-than-expected demand.
The agency expects stockpiles held by each New York and London futures exchanges to expire by the top of the yr, and sees a deficit of between 650,000 to 700,000 metric tons this season. That’s greater than the 439,000-ton scarcity forecast by the Worldwide Cocoa Group, as crops in Ivory Coast and Ghana have suffered from unhealthy climate and illness.
New York futures have plunged greater than 30% from an April report simply shy of $12,000 a ton. The commodity continues to be up greater than 80% in 2024. Andurand stated earlier this yr that costs might prime $20,000 a ton.
“There was no important change in funding views as we proceed to count on greater copper and cocoa costs,” the agency stated in its letter.
(By Nishant Kumar and Ilena Peng)