COT Report: Speculators cut metals and grain exposure ahead of copper rout; USD shorts halved last month

Commodities

In the reporting week to July 29, managed money accounts—including hedge funds and CTAs—responded to weaker price action across precious and industrial metals, as well as grains, by turning net sellers in these sectors. In contrast, ongoing supply/demand driven strength in crude oil and refined products continued to attract buying interest, particularly in Brent and diesel.

Notably, the reporting period concluded just before a 23% collapse in NY copper prices, which followed the Trump administration’s decision to abandon plans for a 50% tariff on refined copper imports.

The most significant selling activity was seen in gold, where months of range-bound trading and recent dollar strength eroded bullish conviction. The net long in gold fell by 16% to 143k contracts—well below the January peak of 234k. Meanwhile, ahead of the copper slump—which also triggered profit-taking in silver and platinum—these three metals saw modest net selling.

Crude oil prices rallied 6% during the week, driven by escalating geopolitical tensions after Trump shortened the timeline for Russia to broker peace in Ukraine, raising the threat of secondary sanctions. Brent briefly broke above USD 70 per barrel, but later retreated after OPEC+ signaled plans for a substantial production increase in September. Diesel remains a standout performer, with market tightness driven by low inventories, refinery disruptions, sanction risks, and resilient demand. This backdrop has lifted speculative longs in ICE gas oil and NY ULSD to near three-year highs.

Agricultural commodities traded mixed, with the most notable trend being continued selling across key crops. Expectations of another bumper harvest across the Northern Hemisphere—adding to ample supplies from South America—have kept pressure on prices. The Bloomberg Grains Index remains near a five-year low, with managed money accounts holding net short positions across all three major crops, led by corn and wheat. The resulting oversupply is reflected in contangoed forward curves, with spot prices trading below deferred contracts, thereby favoring traders holding short positions.

What is the Commitments of Traders report?

The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class.

Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and other
Financials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and other
Forex: A broad breakdown between commercial and non-commercial (speculators)

The main reasons why we focus primarily on the behavior of speculators, such as hedge funds and trend-following CTA's are:

• 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

Do note that this group tends to anticipate, accelerate, and amplify price changes that have been set in motion by fundamentals. Being followers of momentum, this strategy often sees this group of traders buy into strength and sell into weakness, meaning that they are often found holding the biggest long near the peak of a cycle or the biggest short position ahead of a through in the market.