COT: Gold and coffee shorts getting squeezed
Head of Commodity Strategy
Summary: Leveraged funds were net-buyers of commodities for a third consecutive week with broad-based buying of agriculture and natural gas offsetting selling elsewhere, most noticeably in crude oil and gold.
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: Commodities report for the week ending October 9, click here.
Hedge funds remained unconvinced about the bullish oil narrative which in recent weeks drove the price to a four-year high. In the week to October 9 they sold both Brent and WTI for a second week as supply worries eased and demand concerns began receiving some attention. The WTI net-long reached a one-year low and it has now been sold in 11 out of the past 13 weeks.
HG copper was sold with the net-short rising to a three-week high. However, the outlook for tight supply, falling LME stocks and strong China import data are unlikely to support the latest short accumulation.
In grains, short-covering continued to be led by corn and the soybean complex. During the week soybeans received some support with rain across the US Midwest and Plains delaying the harvest while potentially negatively impacting the crop condition. Overall the combined net-short in the three major crops was reduced by 22k lots to 92k lots, not far from the five-year average for this time of year.
A stronger Brazilian real, tighter sugar supply on EU export concerns and a technical breakout in coffee helped trigger a 57% and 16% reduction in the net-shorts. The latter has been a classical example of why it is important to follow the COT updates. A record short due to weak fundamentals had driven coffee to a 12-year low but in just three weeks it has retraced almost half of the previous 12-month decline.
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Energy crisis could turn energy stocks into secular winnerWith long-term expected returns for the global energy sector close to 10%, we look at 40 stocks that could be set to cash in.
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.