COT: Speculative interest in energy and metals gains momentum COT: Speculative interest in energy and metals gains momentum COT: Speculative interest in energy and metals gains momentum

COT: Speculative interest in energy and metals gains momentum

Ole Hansen

Head of Commodity Strategy

Key points:

  • Commitment of Traders report highlighting futures positions and changes made by speculators across forex and commodities during the week to April 2 
  • Dollar long position hits 18-month high, driven by a slump in the IMM Euro long to a 30-month low
  • Demand for crude oil, gas oil, gold, sugar and coffee more than offsetting fresh grain market selling
  • Copper length cut by one-quarter just before prices jumped to a one-year high


In the forex market, broad dollar strength in the week to April 2 continued to be the main focus, and it drove a third weekly increase in the non-commercial dollar long versus eight IMM currency futures to an 18-mth high at USD 16.1 billion. The main changes seen during the reporting week were a 46% reduction in the EUR long to a September 2022 low at 16.8k contracts (USD 2.3 billion equivalent), the JPY short hitting a 2013 high at 143.2k contracts (USD 11.9 billion). Besides the dollar, long positions were also held in GBP and MXN, the latter reaching a fresh four-year high at 133.7k contracts (USD 4 billion), as the positive carry continues to attract demand.

Non-commercial dollar position versus eight IMM currency futures and the Dollar index


In the week to April 2, the Bloomberg Commodity index, which tracks a basket of 24 major futures markets split between energy (30.1%), metals (34.2%) and agriculture (35.7%), rallied 2.2% to reach a fresh four-months high. Led by sector gains in precious metals (4.1%), energy (3.8%) and industrial metals (2.1%). Once again, the grains sector stood out, losing 1.5%, thereby supporting speculators long-held bearish view, reflected by a 565k contract net short, valued at USD 18.5 billion.

All of the 13 energy and metal contracts tracked in this recorded gains on the week, supported by a variety of drivers from geopolitical tensions and supply worries to global growth optimism and strong positive price momentum. Managed money accounts from hedge funds to CTAs responded to these overall bullish developments by lifting their across-market gross long by 103k contracts, while the gross short only saw a small 13k contract increase, interestingly driven by copper sellers who very soon after found themselves on the wrong foot as the contract broke higher to reach a one-year high.

Managed money long, short and net positions in the week to April 2
Energy: Broad buying of crude and fuel lifted the combined net long to a two-year high at 694k contracts, with the bulk of 529k being held in crude oil, not least Brent which at 300k hit a 2-1/2-year high amid focus on global supply risks from developments in the Middle East.
Metals: The gold long reached a July 2020 high at 178k contracts, still below the 292k record high recorded in September 2019. Silver’s 5.3% jump only attracted a relative small amount of fresh buying, leaving the net long some 65% below the April 2017 record high when the price traded around USD 19 per ounce. Funds struggled to deal with copper’s recent rollercoaster, leaving the net down 24% to 15.4k just before prices jumped to a one-year high.
Grains: fresh grain market weakness drove an increase in the soybean and corn net short positions, lifting the overall sector short to 490k contracts led by soybeans (-138k) and corn (-260k). Holding a major short ahead of the important northern hemisphere planting and growing season remains a key focus, especially if adverse weather developments boost prices.
Softs: The cocoa net long was cut to a fresh one-year low at 19.7k contract, down 72% since January, while weather concerns in Brazil and Vietnam drove an increase in the Arabica net long to a 2-year high at 57.3k 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.


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