The below summary highlights futures positions and changes made by hedge funds across commodities, forex, bonds and stock indices up until last Tuesday, December 8. A week where vaccine and stimulus optimism continue to propel stock markets higher and the dollar lower while bonds held steady. Commodities traded mixed with continued profit taking across agriculture commodities and a big setback for natural gas more than offsetting gains in oil, fuel products and metals, both precious and industrials.
The Bloomberg Commodity Index traded lower by 1.2%, hurt by continued profit taking in agriculture commodities led by soybeans, wheat, cocoa and cattle together with a 16.7% drop in the price of natural gas. Overall these developments helped drive a 3% reduction in the total net long held by speculators across 24 major commodities to 2.3 million lots, but not far from the February 2017 record of 2.4 million lots. A clear sign that speculators expect more to come from the commodities in 2021 as the reflation trade gathers momentum and the dollar potentially continues to weaken.
It is also worth noting that speculative positions, compared with recent peaks in 2017 and 2018, are much more spread out across all sectors, with net long positions held in all but one (CBOT Wheat) commodity. In February 2017 when the net-long hit the mentioned record, the energy sector accounted for 56% of the total length while today that share is down to 42%.