COT Report: Dollar shorts at four-Year high, Crude slump rattles speculators

Commodity swings give managed money a rough ride

It’s been a wild ride across key commodities this past month—none more so than energy. Brent crude surged more than 30% in just three weeks, peaking on Monday, 23 June, before nosediving in its biggest two-day drop since 2022, erasing most of the summer demand and Middle East risk premium gains. Elsewhere, broad strength helped push the Bloomberg Commodities Index to a fresh cycle high on 20 June, only to stumble last week as weakness in energy and grains set in.

The turbulence has been particularly punishing for trend-following funds like CTAs and hedge funds, whose positioning is tracked in the weekly Commitment of Traders report. Whipsaw price action forced these funds to chase the market up and down—often buying high, selling low—amplifying volatility and occasionally driving price swings that defy fundamental logic.

Broad selling as BCOM suffers a 4% setback, led by energy and agriculture

The latest CFTC reporting week to Tuesday, 24 June, captured a dramatic unwind across commodities, sparked by the sudden easing of Middle East tensions following a US-brokered ceasefire. Crude oil took the biggest hit, with WTI and Brent futures tumbling 12%, while gold and silver also lost their shine as safe-haven demand faded. The Bloomberg Commodity Index dropped 4% on the week, with losses felt across the board—except in industrial metals. Alongside the energy slump and precious metal pullback, agriculture also joined the red tide.

Trend-following funds and managed money accounts reacted swiftly, unloading 95.5k crude oil contracts—wiping out more than half of the previous three weeks’ buildup. Brent bore the brunt, with the net long slashed by 29% to 192.6k. Interestingly, despite the broader selloff, a tight product market saw fresh longs added in gasoline and diesel.

Metal market activity was more restrained. Weakness in gold and silver triggered some long liquidation, but short sellers remained cautious—suggesting the buy-the-dip mentality is still alive, if not entirely well. Speculators stayed lukewarm on platinum despite its recent four-year high, with the net long ticking up to 19.8k, well above the five-year average but still shy of the October peak at 30.8k. Copper, by contrast, saw a pickup in interest, with the net long rising to a 13-week high at 29.2k, buoyed by tightening non-U.S. supply and tariff chatter.

In grains, the sector dropped 4.5% last week and now braces for key USDA reports on acreage, stocks, and crop progress later today. Corn, soybeans, and wheat remain under pressure amid expectations of abundant global supply and generally favorable growing weather. Pre-report surveys point to a 7.3% YoY drop in U.S. corn stocks, a five-year high for soybeans, and a 20% YoY surge in wheat stocks—marking a four-year high.

Wheat saw some short covering during the reporting week, but little fresh buying appetite. Corn and soybean meal shorts remained elevated, with the latter hitting a record 110k contracts—driven in part by strong demand for soybean oil, which is boosting not-so-hot meal production. Elsewhere, the sugar short ballooned to its largest since 2019 at -85.6k, the Arabica coffee long fell to a November 2023 low at 23.3k, while lean hogs attracted heavy bullish interest, with the net long hitting a record 134k contracts.

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 main reasons why we focus primarily on the behavior of speculators, such as hedge funds and trend-following CTA's 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

Do note that this group tends to anticipate, accelerate, and amplify price changes that have been set in motion by fundamentals. Being followers of momentum, this strategy often sees this group of traders buy into strength and sell into weakness, meaning that they are often found holding the biggest long near the peak of a cycle or the biggest short position ahead of a through in the market.