CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs, FX or any of our other products work and whether you can afford to take the high risk of losing your money. Losses can exceed deposits on some products.
Summary: Hedge funds increased bullish bets across 24 major commodity futures by 44% during the week to June 18, the day before the FOMC meeting.
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.
To download your copy of the Commitment of Traders: Commodity report for the week ending June 18, click here.
Gains were led by WTI crude oil, gold, soybeans, corn, wheat and sugar. At the other end, natural gas and Brent crude oil saw most of the selling.
Crude oil was mixed, with a small combined reduction in the net-long being the result buyers returning to WTI for the first time in eight weeks while selling of Brent extended into a sixth. Since April 26 the combined long has been cut by 41% or close to 300k lots hence the bullish reaction to the post FOMC dollar weakness, the biggest drop in US oil stocks in six weeks and not least worries that tanker and drone attacks in the Mideast could escalate to something more dramatic.
Natural gas remained under attack from short-sellers as the price slid to a 1995 seasonal low on rising US stockpiles. Rising shale output has swamped a market where a sustained period of summer heat is now needed to boost demand from utilities and bring about short-covering.
Strong buying of gold continued ahead of the post-FOMC surge to $1,400/oz. Funds increased the net-long by 21% to 190k lots, a 16-month high. During the past three weeks a record 157k lots has been bought and with this in mind the short-term focus turns to gold’s ability to hold onto these gains and reassure new longs that they have not bought another high but instead a potential new low. With that in mind the 2016 high at $1,375/oz and 2018 high at $1,366/oz are now the key technical levels that need to hold in order to avoid profit taking.
Copper’s bounce from key support at $2.6/lb supported a 15% reduction of the record short while renewed widening of platinum’s record discount to gold, approaching 600 dollars, helped drive a 36% increase in the net-short to 21k lots a 40-week low.
Strong buying of grains extended into a fifth week led by soybeans (net-short cut to 12-week low) and corn (net-long at 1-year high) as ongoing weather worries could further reduce the 2019 crop outlook. Primarily due to the continued short position in soybeans the combined long of the three major crops only reached 90k lots, less than one-quarter of the most recent seasonal peak from 2015.
Soft commodities were mixed with short-covering halving the sugar net-short to a 7-week low. The cocoa net-long reached a one-year high before profit taking emerged to challenge the uptrend.
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.
While a deep recession may not be iminent thanks to central bank policy, interest rates will have to stay high for longer, and this will be accompanied by volatility risk from the unwinding of bubbles, especially within AI.
Equities: The AI fever pushes market to new extremes
The emergence of advanced AI systems is by far the most surprising event this year, turning everything upside down, while risks and benefits are debated. AI will also become an arms race between the US and China.
China faces challenges from generative AI amidst the fragmentation game
As China navigates global fragmentation, its cycle of technology application, productivity enhancement, and growth is threatened by US breakthroughs in generative AI, limited computing power, and geopolitical tensions.
Japan’s riposte to aging and productivity headwinds: robots with generative AI
Japan’s expertise in semiconductors and robotic integration could be the foundation of AI dominance. Combining two of this year's themes, Japanese equities and artificial intelligence, brings a wave of opportunities.
The AI fever has turned the technology into a darling, pushing crypto further into no-man’s-land. There are striking similarities between AI and crypto, and if these are to come full circle, AI won't be spared for bubbles.
The USD is on its back foot as markets celebrate an eventual Fed rate peak and steady long US yields. The stakes are even higher for the Japanese yen if longer major sovereign yield curves have to price in economic acceleration.
While commodities, broadly speaking, have faced some tough months, a partial reversal during June could signal that the asset class is getting back on its feet with energy holding up and precious metals with upside potential.
Fixed income: To hike or not to hike, that is the question
As inflation remains high central banks face hard decisions about whether they should keep hiking interest rates or stop. Meanwhile, the rise of AI creates bubble-like conditions that only make the decision harder.
Your browser cannot display this website correctly.
Our website is optimised to be browsed by a system running iOS 9.X and on desktop IE 10 or newer. If you are using an older system or browser, the website may look strange. To improve your experience on our site, please update your browser or system.