COT: Broad commodity buying; Dollar long jumps COT: Broad commodity buying; Dollar long jumps COT: Broad commodity buying; Dollar long jumps

COT: Broad commodity buying; Dollar long jumps

Ole Hansen

Head of Commodity Strategy

Summary:  Futures positions and changes made by hedge funds across commodities, forex, bonds and stock indices up until last Tuesday, October 5. A week that saw stock markets gyrating between sharp gains and losses in response to US debt ceiling talks, tightening Federal Reserve policy and the energy crunch. While the dollar and yields traded steady a lot of action was once again seen in commodities where speculators continued to accumulate exposure across most sectors.

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 and attached report highlight futures positions and changes made by hedge funds across commodities, forex and financials up until last Tuesday, October 5. A week that saw the S&P alternating between sharp gains and losses in response to US debt ceiling talks, tightening Federal Reserve policy and the energy crunch. Developments that in the end left the S&P 500 a tad softer while US treasury yields and the dollar held steady.


A lot of action was once again seen in commodities with the Bloomberg Commodity spot index hit rising 3% to hit another decade high. Just like the previous week, some of the biggest movers were found in energy led by natural gas, crude oil and diesel. Precious metals found a fresh bid but apart from energy the biggest movers were found in agriculture where strong gains were seen in soybean oil (fuel link), wheat, cocoa and not least cotton.

In response to these continued bullish developments, hedge funds increase their net long positions across 24 major commodity futures markets by 5% to a four-week high at 2,08 million lots, with the increase spread out across all sectors with copper and platinum-group metals being the exceptions.

Energy: Buying of crude oil extended to a sixth week with the WTI and Brent net long rising by 22k lots to a 12-week high at 649k lots. The diesel (NY Harbor ULSD) long jumped to a three-year high at 48k lots while length in natural gas continued to be reduced despite seeing the price surge higher by 7.3%. 

Latest from our Daily Market Quick Take: Crude oil has started the week on a strong footing as the global power crunch continues to raise expectations for higher gas-to-oil switching demand at a time where OPECmaintains its modest pace of monthly oil production increases. Saudi Aramco estimates the gas shortage has already lifted oil demand by an additional 0.5m barrels/day. Coal futures in China surged 8% overnight after torrential rain and landslides halted some production at mines in the Shanxi province, the nation's top producing region, thereby adding further support to global fuel prices, including crude. Monthly oil market reports on tap this week, starting with OPEC on Wednesday and followed by the IEA on ThursdayWith WTI already trading at seven-year high, Brent may now target the 2018 high at $86.74.

Metals: Hedge funds had another go at trading precious metals from the long side with the gold net long rising by 61% to 67.8k lots, and the silver long by 1k to 4.6k lots. In general the exposure in both metals remain weak given the two metals current struggle to muster a rally during times of price supportive developments, only to fall back on price negative news. Copper also remains an under owned metal following many months of sideways trading while only small changes were seen in the two shorted metals of platinum and palladium.

Agriculture: Speculators resumed selling in soybeans with the net long falling by 9.9k lots to 49.5k, a fourteen-month low, and during the past year the net long has now collapsed by 80%. Soybean oil meanwhile received buying attention given its fuel link. Small buying of corn while the CBOT wheat position flipped back to a net long, a development that has been seen four times during the past year and it reflects how speculators struggle to build consensus for this key crop. In softs, the cocoa long jumped 226% to 31k lots after the price surged by 8%. Cotton's 9% rally to a fresh multi-year high supported a 2% increase to 96.7k lots, highest since May 2018. Coffee net buying continued (+6% to 45.6k) despite negative price action during the reporting week. 


The dollar long against ten IMM currency futures and the Dollar Index jumped 43% or $7.7 billion to $25.6 billion and is now the largest since June 2019. The greenback was bought against all currency futures except JPY, and speculators now hold net short positions in all pairs except NZD. Selling was concentrated in EUR (23.2k) with speculators going short for the first time since last spring. However, at 22k lots the short remains well above the 114k lots short seen during the early stages of the Covid-19 panic in February last year.

Interesting to note that the aggressive dollar buying occurred during a week where the Bloomberg Dollar Index traded unchanged with weakness in EUR being offset by strength in all the other major crosses, especially GBP, CAD and AUD.

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


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