COT: OPEC cuts triggered biggest buying spree since 2016

This summary highlights futures positions and changes made by hedge funds across commodities and forex during the week to last Tuesday, April 4. A week that saw a continued and broad recovery in risk appetite, led by a strong rally across the stock market. A softer dollar and lower bond yields also helped sentiment as markets continued to recover from the March banking crisis.

The Bloomberg Commodity Index meanwhile jumped 2.1% with broad gains being led by energy where the surprise OPEC+ production cut triggered the biggest buying spree of WTI and Brent crude oil futures since December 2016. A continued rally in precious metals saw silver jump more than 7% while gold managed a break above $2000. The grains sector saw strong buying of corn and soybeans while the Kansas RHW wheat contract received a boost from deteriorating crop conditions. Overall, the buying was driven by a handful of contracts, led by WTI and Brent crude oil, as well as soybeans, corn and gold. 

Metals

It was another strong week for investment metals, led by a 7.2% jump in silver while gold gained a foothold around $2000. Hedge funds responded by adding gold length for a fourth consecutive week, resulting in the net reaching a one-year high at 145k contracts. Silver, meanwhile, late to the game, saw its net long jump 80% to 12k lots to 19.5k contracts, still below the recent peak at 30k contracts from late December. Platinum with its discount to gold still hovering around 1000 dollars saw its net long rise three-fold to 8.8k contracts, still some 64% below the January peak at 24k. 

Copper length meanwhile was cut by one-third to just 4k contracts, primarily driven by a 4.6k contract increase in the gross short. The green transition metal has been in downtrend since January with global demand worries more than offsetting falling stocks.

Agriculture

Funds turned net buyers of the grain sector for the first time in seven weeks, during which time the net long across six grain and soy contracts were cut by 85% to a 2-1/2-year low at 80k contracts. Buying last week was led by soybeans (+46k) and corn (35k), the latter flipping back to a small net long of 21.5k contracts, a small change compared with the 380k contract long seen this time last year. Wheat buying was concentrated in the Kansas HRW contract with drought across key winter growing areas hurting the crop outlook, and in the process driving the Kansas premium over Chicago to a record 195 cents per bushel. 

Broad fund buying of softs saw the sugar long rising by 5.6% to 216k contracts while the cocoa long reached a fresh three-year high at 51.5k contracts. Short covering reduced the cotton short by 26% to 6.2k contracts while coffee length was cut by 20% to a three-week low at 9.7k contracts. 

Forex

In forex, the broad dollar weakness seen during the week had a limited impact on the overall dollar short versus nine IMM currency futures, with buying of GBP, AUD and NZD being partly offset by selling of EUR, CHF and JPY. Also important to note that the gross $6 billion dollar short is exclusively being supported by a $19.7bn equivalent long in EUR, with short positions held across most of the others, led by JPY ($5.5bn), CAD ($4.4bn) and AUD ($1.8bn)