Hedge Fund Reader : Hedge Funds and Commodities Trading

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December 02, 2006

Hedge Funds and Commodities Trading

-- By Pushpa Sathish, Staff Writer

Hedge funds are showing more interest in the commodities markets, information that is proved true by the sharp increase in the global worth of assets in this sector – up to $22.5 billion from $12 billion only a year ago. Sugar, coffee and cocoa have found favor with former sugar trader at ED&F Man Holdings Ltd. and current founder of the hedge fund Tropix Capital LLC, Sean Diffley.

Investors in the fund revealed on the condition of anonymity that come the new year, Tropix would start trading in these commodities. Initial capital appears to be pouring in from Ospraie Wingspan LP, the investment fund launched last year by the $4.5 billion hedge fund, Ospraie Management LLC, which has around $900 million of its money invested in other commodity funds.

With sugar prices slumping 22 percent in New York following good sugarcane harvests in both India and Brazil, cocoa in London sliding down by 11 percent, and coffee being the only commodity to gain 21 percent, it remains to be seen if Tropix will be successful in its strategies.

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December 2, 2006 in Emerging Markets | Permalink