COMMODITIES 13 minutes to read

COT: Brent, copper, sugar buck selling trend

Ole Hansen

Head of Commodity Strategy

Summary:  Leveraged funds continued to cut bullish bets across 25 major commodity futures in the week to September 18, but Brent crude shrugged off the trend on the back of supply disruption fears while copper and sugar also saw short-covering gains.


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 September 18, click here

Leveraged funds cut bullish bets on 25 major commodity futures to 757,000 lots, a 2½ year low, in the week to September 18. The main driver last week was the grain sector which saw across-the-board selling ahead of what is expected to be a bumper US harvest.
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The energy sector was mixed with the drop in supplies from Iran and Venezuela favoring Brent (+28,000 lots), the global benchmark, over WTI (-13,000 lots). Overall the combined net-long rose 15,000 to 811,000 lots, a 10-week high, as the short-term outlook continued to favour higher prices. This was bolstered after the Opec+ group met and left Algiers this weekend without providing any additional barrels, thereby sidestepping President Trump's demand for additional supply to help offset his actions against Iran. 

The additional rally above $80/b in Brent crude oil this Monday followed comments from two of the world’s biggest oil traders about the short-term risk of higher prices. Executives from Trafigura and Mercuria at the annual Asia Pasific Petroleum Conference (APPEC) in Singapore both saw the risk of oil rising to $100/b by 2019. Falling supplies from Iran due to US sanctions may drive the market into a significant supply deficit during the coming quarters. You can follow news from the conference by following #PlattsAPPEC on Twitter.

Natural gas was sold before rallying on the news that China would introduce tariffs on US LNG at a lower-than-expected rate. 
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Gold was sold again as it continued to struggle above $1,200/oz. The HG copper net-short was cut to a 10-week low following a 45% reduction and platinum to a 14-week low on improved outlook for Chinese demand after the country announced plans to cut taxes and increase spending. 
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Continued selling of the three major crops ahead of a bumper US harvest helped send the combined net-short to 212,000 lots, the most bearish since February. The earlier support for Chicago wheat due to a troubled growing season outside the US continued to fade with funds turning net-short again. 
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In soft commodities the sugar net-short was halved despite renewed price weakness during the reporting week. Bearish Arabica coffee bets reached a new extreme at 109,000 lots and it remains the least favoured of all commodities with the price lingering at a 12-year low. 
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