COT: Broad-based buying lifts bullish bets
Head of Commodity Strategy
Summary: Commodity prices are on the rise as money managers pile into the space post-FOMC.
To download your copy of the Commitment of Traders: Commodity report for the week ending March 19, click here
Three weeks of buying have more than doubled the net-long position hedge funds hold across 25 major commodity futures. In the week to March 26 they bought a net 161k lots spread across 17 futures contracts. This was the week where global markets reacted to the dovish shift from the US Federal Open Market Committee on March 20.
Longs in WTI, Brent, gold, platinum and livestock extended further while short-covering was seen in soybeans, corn, wheat, sugar and cotton.
The continued risk-on sentiment across global stocks and the stronger than expected pick-up in Chinese PMI over the weekend continue to ease growth and demand concerns. These developments together with ongoing price supportive production cuts from the Opec+ group of producers are likely to attract a continued recovery in the speculative long.
The platinum net-long jumped to a one-year high before another failure to break resistance at $875/oz, combined with a speculative washout in palladium, helped send the price lower.
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.
Latest Market Insights
Quarterly Outlook Q3 2022: The Runaway Train
- Central banks' attempts to kill inflation is a paradigm shift, which could end in a deep recession.
Tangible assets and profitable growth are the winnersWith US equities officially in a bear market, the big question is where and when is the bottom in the current drawdown?
Understanding the lack of investment appetite among oil majorsThe everything rally seen in recent quarters has become more uneven, as its strength is driven by commodities in short supply.
The pressure is on as the wind leaves the sailsWith cryptocurrencies in sharp decline, are we entering a crypto winter or is the bear market a healthy clean-up of the crypto space?
Why the Fed can never catch up and what turns the US dollar lower?Many other central banks are set to eventually outpace the Fed in hiking rates, taking their real interest rates to levels higher than the Fed will achieve.
Bank of Japan: Swimming against the tideThe Japanese economy has gone from the age of deflation to rapidly rising prices in no time, leaving the Bank of Japan in a pickle.
Green transformation detour and bear market hibernationWith the impending risk of global econonomic derailment, we share the five things investors need to consider in this new half year.
Crisis redux for the eurozone?Whether there's going to be a recession in Europe or not, the path towards a stable economy will be agonizing.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)