CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 64% of retail investor accounts lose money when trading CFDs with this provider.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 64% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs, FX or any of our other products work and whether you can afford to take the high risk of losing your money.
Summary: Confidence in commodities waned in the week ending March 12, as a broad range of futures were sold, especially in the metals and agriculture sectors. Energy, though, continued to thrive.
Saxo Bank publishes two weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.
To download your copy of the Commitment of Traders: Commodity report for the week ending March 12, click here.
Hedge funds cut bullish bets on 26 major commodity futures by 38% to 308k lots, a fresh three-year low. Selling was broad-based across both metals and agriculture while the energy sector continued to enjoy the tailwind of tightening supply and the positive correlation to rising equities.
The net-short across 14 agriculture commodity futures reached a record 624k lots with the grain sector contributing 504k lots, a record high for this time of year. Aggressive selling of all the major crops of soybeans, corn and wheat left these increasingly exposed to short-covering rallies similar to the one that occurred last week.
The below chart shows the year-to-date performances of the Bloomberg Commodity Index agriculture subcomponents which take the futures roll into account. While cocoa, wheat and coffee have all suffered major losses the performance of the others does not, in our opinion, support the current level of speculative short positions held in most.
We conclude that the short to medium term outlook will have to deteriorate further to justify the current record short exposure. Any change in the technical and/or fundamental outlook, in other words, raises the risk of a sharp recovery as short sellers begin to scale back their exposure.
The combined net-long in Brent and WTI crude oil reached 457k lots, the highest since October 20. Short covering drove the 6k lots increase in WTI while Brent saw increases in both long (9k) and short (4k) positions.
Three weeks of gold selling has now cut the net-long by 67k lots to just 42k lots. Fresh short selling drove the move as gold came close to challenge key support below $1,280/oz. Silver saw its net-long almost cut in half as both metals struggled amid a stronger dollar, weaker-than-expected US inflation and rising risk appetite as seen through stocks. Hedge funds currently holds positions well below the five-year average. This was perhaps justified in silver, which currently trades some 8% below it’s five-year average, and less so in gold which trades nearly 5% above.
Platinum speculators returned to neutral after cutting the net-long by 81% to a 20-week low. Palladium longs were cut to a four-month low while copper’s 28% net-long reduction was driven by profit taking with no major appetite for going short the metal at this stage.
Short positions across all four soft contracts led by sugar increased further while speculators holding a net-short in lean hogs were left unprepared for the price surge that followed last week’s news about strong demand from a swine fever hit China.
What is the Commitments of Traders report?
The Commitments of Traders (COT) report is issued by the US Commodity Futures Trading Commission (CFTC) every Friday at 15:30 EST with data from the week ending the previous Tuesday. The report breaks down the open interest across major futures markets from bonds, stock index, currencies and commodities. The ICE Futures Europe Exchange issues a similar report, also on Fridays, covering Brent crude oil and gas oil.
In commodities, the open interest is broken into the following categories: Producer/Merchant/Processor/User; Swap Dealers; Managed Money and other.
In financials the categories are Dealer/Intermediary; Asset Manager/Institutional; Managed Money and other.
Our focus is primarily on the behaviour of Managed Money traders such as commodity trading advisors (CTA), commodity pool operators (CPO), and unregistered funds.
They are likely to have tight stops and no underlying exposure that is being hedged. This makes them most reactive to changes in fundamental or technical price developments. It provides views about major trends but also helps to decipher when a reversal is looming.
With oil at $150, Saudis buy Champions League franchise
Emboldened by surging crude oil prices, Saudi Arabia makes waves on the international stage, as Crown Prince Mohammed bin Salman manages to create a World Champions League, after buying the UEFA Champion League franchise.
World hit by major health crisis as obesity drugs make people stop exercising
As the world embraces GLP-1 obesity wonder drugs, the people next in line to get a prescription stop caring about dieting and exercising, figuring that the drug will later solve all of their weight-related health problems.
With the US budget deficit spiraling above 10% of the GDP, the government is desperate to foster demand for US Treasuries. Under intense pressure from the White House, Congress makes income from government bonds tax-free.
Generative AI deepfake triggers a national security crisis
After a criminal group deploys the most deceptive AI deepfake ever seen, generative AI becomes a national security threat. With public distrust soaring, governments crack down with harsh new laws, puncturing the AI hype.
Deficit countries form ‘Rome Club’ to negotiate trade terms
To fix the divergence in the global trade and financial system, the largest deficit countries unite to negotiate new world trade terms. For surplus countries, the reset of the global economic model is a painful adjustment.
Robert F. Kennedy Jr wins the 2024 US presidential election
As discontent with Biden and Trump rises to fever pitch, Robert F. Kennedy Jr sees his support rising inexorably in the polls. On November 5, Kennedy wins the US presidential election, ushering in a new era in US politics.
Japan’s ‘lucky 7%’ GDP growth rate forces BoJ to abandon yield curve control
Stepping up Japan's economic transformation in 2024, PM Kishida brings in a host of populist policies to boost domestic demand. As the GDP growth rate hits 7%, the BoJ is forced to abandons its yield curve control policy.
Luxury demand plunges as EU goes Robin Hood, introducing wealth tax
As people wake up to how little tax Europe’s billionaires are actually paying, the EU Commission implements a wealth tax of 2%. The tax sends shockwaves through Europe's luxury industry, with luxury giant LVMH plunging 40%.
The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.
Your browser cannot display this website correctly.
Our website is optimised to be browsed by a system running iOS 9.X and on desktop IE 10 or newer. If you are using an older system or browser, the website may look strange. To improve your experience on our site, please update your browser or system.
