COT: Specs cut commodity length on China demand woes and peace talks COT: Specs cut commodity length on China demand woes and peace talks COT: Specs cut commodity length on China demand woes and peace talks

COT: Specs cut commodity length on China demand woes and peace talks

Ole Hansen

Head of Commodity Strategy

Summary:  The COT reports published weekly by the US CFTC highlight futures positions and changes made by hedge funds across commodities, forex and financials. In the latest reporting week to March 29, the stock market saw continued gains, despite the risk of an economic slowdown being signalled through flattening yield curves. The dollar traded sideways for a third week while the Bloomberg Commodity Spot index lost 1.5% on the week, thereby pairing back some of the exceptional strong gains that helped sent the sector towards its strongest quarter in many decades

Saxo Bank publishes 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.

This summary highlights futures positions and changes made by hedge funds across commodities, forex and financials up until last Tuesday, March 29. A week that saw continued gains across US stocks and with that a drop in the VIX index to an early January low. A fragile rally in the sense the US yield curve continued to flatten, with the 10-2 year spread dropping by 19 bp to 2 bp, thereby signaling heightened risk of an incoming economic slowdown. The dollar traded sideways for a third week with strength across key commodity currencies and the euro being offset by JPY and GBP weakness.


The Bloomberg Commodity Spot index lost 1.5% on the week, thereby pairing back some of the exceptional strong gains that helped sent the sector towards its strongest quarter in more than 100 years. Losses being led by the energy and grains sectors in response to Russia/Ukraine peace talks and worries about the short-term demand outlook in China, where Shanghai emerged as the epicenter of China’s worst virus outbreak since the early days of the pandemic.

Weekly losses in 17 out of the 24 major futures contracts tracked in this drove a broad reduction across all sectors. The agriculture sector, however, was mixed with selling of grains being partly offset by demand for softs and livestock.

Energy: Speculators, spooked by loss of bullish momentum due to Chinese demand worries, Russia/Ukraine peace talks and a flattening US yield curve signaling heightened growth risks, cut their combined long in WTI and Brent by 13.5k lots to 411k lots, and just above the 400k lots low from December. This just days before President Biden announced a 180 million barrels release from strategic reserves which helped send crude oil towards its biggest weekly loss in more than ten years. The 30-day volatility across the energy sector jumped to 64.5%, more than double the 2021 average, thereby highlighting a market that remains difficult to trade.

Metals: Selling of gold extended to a third week, albeit at a slower pace following the 175 dollar early March correction. During the past three weeks short-term momentum driven hedge funds have cut their net length by 46k lots to a six-week low at 130k lots. With total holdings in bullion-backed ETFs rising by 2.9 million ounces or 29k lots during the same period, it highlight the current battle between short and long-term investment strategies. The latter being driven by worries about the growth outlook, a prolonged period of inflation forcing strong Fed action and with that the risk of a policy mistake. In addition, a general uncertain outlook for stocks and bonds driven demand for diversification.

Silver, platinum and palladium also saw net length being reduced while rangebound copper attracted 5k lots of fresh buying.

Agriculture: A 5% drop in the BCOM grains index, triggered long liquidation in all six contracts with the 54.6k lots reduction being led by soybeans and corn. Some of the action most likely being driven by traders adjusting positions ahead of Thursday’s Prospective Planting report, the first survey-based glimpse into potential harvest outcomes for the upcoming US growing season.


Speculators bought dollars for a third consecutive week to March 29, resulting in the net long against ten IMM currency futures and the Dollar Index rising by 21% to an eleven week high at $18.3 billion. The Japanese yen received most of the attention, reaching a seven-year low against the dollar on rising yield differentials after the Bank of Japan offered to purchase 10-year bonds in unlimited amounts to defend the 0.25% yield target. As a result the JPY net short jumped 22.6k lots to a four-month high at 102k lots. The Aussie dollar, one of the strongest currencies during the past month, remained surprisingly the second most shorted currency after the JPY, and after another weekly gain it only saw a small 1.6k contracts reduction in the net short.

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 reasons why we focus primarily on the behavior of the highlighted groups 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



The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (
- Full disclaimer (

Saxo Markets
40 Bank Street, 26th floor
E14 5DA
United Kingdom

Support Centre
For existing clients, please click here to request support via the Support Centre.

Have a question about our products, platforms or services? Visit the Support Centre to find answers for our most frequently asked questions. If you are still unable to locate an answer to your question, you will also find contact details for your local Saxo office to speak with a representative.

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo Markets is a registered Trading Name of Saxo Capital Markets UK Ltd (‘SCML’). SCML is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo Markets assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.