COT: Major switching from oil to gold and grains last week
Head of Commodity Strategy
Summary: Hedge funds maintained an almost unchanged exposure to 24 major commodity futures and options in the week to June 11. However, some major switches continued between the sectors.
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From a technical perspective the dwindling long and increased short positions have left the market exposed to an upside move should the situation in the Middle East deteriorate further. On the other hand the failure to break higher last week amid the evidence of Iranian involvement could indicate that further losses can be seen should the situation stabilise. In Brent the levels in our opinion to look out are currently $59.50/b to the downside and $64.50/b to the upside.
On that basis we are now witnessing a battle between strategic buyers versus tactical short sellers. A draw between the two is likely to be seen as long gold stays within a $1,320/oz to $1,358/oz range.
Forecasts for even more rain have sent corn futures higher for a sixth consecutive day as hopes for more planting vanish and concerns grow about the prospects for the crop that did manage to get planted. The last time the new crop contract for December delivery spiked higher around this time of year was in 2016 when it peaked at $4.49/bu before falling by more than 20% as conditions improved. So far the current December contract (ZCZ9) has reached $4.72/bu with the fundamental and a not yet elevated speculative long providing continued support.