COT: Robust commodity buying despite mixed price action

Ole Hansen

Head of Commodity Strategy

Summary:  The Commitments of Traders report covering positions held and changes made by money managers in the week to June 30. A week that despite mixed price performances saw funds buying 18 out of the 24 major commodity futures tracked in this. The top five included corn, natural gas, soybeans, Brent crude oil and copper.


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.

NOTE: The data was released on Monday instead of Friday due to the U.S. federal holiday.

This summary highlights futures positions and changes made by speculators such as hedge funds and CTA’s across 24 major commodity futures up until last Tuesday, June 30.  During the week, appetite for risk across other asset classes temporarily received a knock with the S&P 500 trading softer while the dollar and bonds rose.

The performance across 24 major commodity futures were mixed with the Bloomberg Commodity Index rising 0.4%. The energy sector saw weaker oil and higher natural gas prices. The metal sector was generally bid with the exception of platinum while the agriculture sector finally received a bid led by corn, coffee and cotton.

Despite the mixed price action hedge funds overall increases bullish bets by 28% to 810k lots with buying seen in 18 out of the 24 commodity futures tracked in this. 

Energy: Crude oil was bought despite trading lower by around 3% during the week. The combined net-long in Brent and WTI crude oil rose by 16.8k lots to 583.4k lots,a five-month high. Brent crude oil, which has been lacking the accumulation seen in WTI since the March low, was in demand with the net long rising by 6% on a combination of longs being added and short positions being cut. 

The price collapse in natural gas to a multi-decade low on June 26 helped attract profit taking on short positions and fresh buying. Overall the combined net-long of four Henry Hub related swap and futures contract rose by one-quarter to 124k lots. 

Metals: Gold was bought for a third week, albeit at a much reduced rate than the previous two weeks. Overall the net long rose by 2% to 180k lots, a nine-week high, but still some 105k lots below the February peak. Silver's continued roller coaster ride attracted both buyers and sellers, but with the net overall rising by 22% to 36k lots.

The copper net long jumped by 59% to reach 27.7k lots, a two-year high, after the metal continued to rally in response to rising virus related supply concerns from mines in South America. 

Agriculture: Buyers finally returned in earnest to corn after the U.S. Department of Agriculture on June 30 estimated plantings would decline about 5 million acres below what farmers told the government they intended to plant in March. The elevated net short was reduced by 27% to 202k lots. Short covering supported coffee with the 3% rally driving an 8% reduction in the net short to 25k lots. 

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.

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