Pierre Andurand’s hedge fund firm Andurand Capital Management will continue to bet on copper and cocoa futures despite recent price declines from their all-time highs earlier this year, according to a report by Bloomberg citing an investor letter.
According to the investor letter, the firm “fully exited” its long oil futures positions ahead of the June OPEC+ meeting, citing a “mixed” current outlook on the oil market, writing that it would “reengage” once there was “greater clarity on the supply side”.
Last year, Andurand forecasted a surge in oil prices to as high as $140 per barrel by the end of 2023. Instead, global benchmark Brent crude never surpassed $100.
This month, OPEC+ agreed to gradually unwind about 2m barrels per day of production cuts starting in October, which has led Andurand “to view the current market setup as mixed”, according to the letter.
The firm noted that its performance last month mirrored copper price fluctuations, with long positions in copper accounting for a substantial portion of the company’s risk in its commodity hedge funds.
Andurand Capital wrote that it expected copper “to move significantly higher over the next decade to incentivise new supply”, highlighting a “decade-long supply crunch”.
On cocoa, Andurand Capital remains “very convinced” of its “long cocoa thesis”, projecting that stockpiles on both New York and London futures exchanges will be exhausted by year-end and anticipating a deficit of 650,000 to 700,000 metric tons this season.
Andurand’s shift in strategy follows a record loss last year, breaking a three-year streak of gains due to misguided bullish oil market predictions. However, from January to May, the Andurand Commodities Fund rebounded by approximately 22%, with the more aggressive Andurand Commodities Discretionary Enhanced fund soaring about 63%, according to the letter.
