The global energy crunch was the main focus with natural gas surging 21% on the week while crude oil jumped close to 7% in anticipation of rising demand from consumers switching to diesel, propane and gas oil from punitively expensive gas and coal. Interesting to note that surging natural gas prices only led to a small 2% increase in the net long, with the increase primarily driven by short covering.
The biggest exception being gold, which saw bullish bets cut by one-third as treasury yields jumped and the dollar rose. Silver buyers returned just before prices slumped again last Wednesday.
Buyers returned to the grains sector for the first time in six weeks with soybeans and corn seeing renewed demand. Cotton’s 11% jump to a ten-year high helped drive the net long to the highest since May 2018 while coffee’s return to $2/lb attracted fresh longs and short covering.
Continued dollar strength in response risk adversity driven by falling stocks, China property sector debt concerns, higher yields and Fed taper expectations helped drive a 14% increase in the greenback long against ten IMM currency futures and the Dollar index to a fresh 19-month high at $17.8 billion. The reporting week did not include last Wednesday’s breakout when the euro dropped to its weakest level since July 2020 while the broad Bloomberg Dollar Index hit an 11-month high.
Biggest casualty was the euro where 11.2k lots of selling took the net back to neutral. The two biggest short positions in yen and AUD extended further with the latter reaching a record high at 86.4k lots. Buying of GBP, NZD and not least CAD helped reduce the overall impact by the equivalent of $1 billion.