Overall, these developments helped drive a 6% increase in the leverage position held by large money managers to 2.12 million lots, representing a nominal value of $146 billion. Buying was concentrated, and wrongly as it turned out following the hawkish FOMC meeting, in gold, while other contracts seeing strong demand were platinum, soybeans, corn, wheat, sugar and hogs.
Energy: Crude oil’s continued ascent continued during the reporting week, albeit at a slower pace with traders keeping a nervous eye on the general level of risk appetite amid tanking stocks ahead of the FOMC meeting. Brent crude oil’s first and failed attempt to break above $90 together with the mentioned nervousness helped trigger a small reduction in the combined net long held in WTI and Brent by 19.5k to 540k lots. A very volatile natural gas market saw the net long reduced by 13k lots in response to a 3.8% sell off during the reporting week.
Metals: Gold’s 2.2% rally following the technical breakout above $1830 supported a 39% increase in the net long to 118k lots. The 33k lots of net buying was the strongest since November and was driven by a combination of fresh longs and short covering. These developments helped explain why the subsequent sell-off following last Wednesday’s hawkish FOMC tilt ended up being that aggressive after recently established longs scrambled to get out. Palladium’s 15% rally on Russia supply concerns supported a 4.7% rally in platinum which helped flip the position back to a net long. Copper activity was low with a reduction in both long and short positions driving a small increase in the net long.
Agriculture: The grains sector was bought for a second week with net buying lifting longs across most contracts. Not least soybeans which reached a seven-month peak on strength in demand for plant-based fuels such as palm and soy oils and poor crop weather in parts of South America. The net short in CBOT wheat has almost halved while the long in Kansas wheat jumped 24% as fears of Russian military action in Ukraine raised concerns about a potential disruption to supplies from the Black Sea region.
Sugar buyers returned and for the first time in many weeks some notably buying helped lift the net long by 24% from an 18-month low. The general loss of risk appetite helped trigger some mild long liquidation across the three other softs contracts of cocoa, coffee and cotton.