COT: Bullish commodities bets vanish as trade tariffs and growth concerns weigh
Head of Commodity Strategy
To download your copy of the Commitment of Traders: Commodities report for the week ending June 26, click here.
Trade war concerns, a stronger dollar and signs of an economic slowdown among key EM countries, led by China, continued to take its toll on money managers' appetite for commodities last week. During the week to June 26 net-selling was seen in 19 out of the 24 futures contracts tracked in this update and following four weeks of continued selling the combined net-long has fallen by 617,000 lots to 1.3 million, the lowest since January 2.
The only contract seeing noticeable buying was WTI crude with the story otherwise being the continued selling of gold and copper and not least the three major row crops of corn, soybeans and wheat.
Crude oil was mixed during a week which saw the spread between WTI and Brent collapse while the WTI prompt spread surged. Both of these events were triggered by a supply outage from Canada which may last through July and support a continued tightening at Cushing, Ok., the delivery hub for WTI crude oil futures. As a result the Brent net-long was cut by 1% while bullish WTI crude oil bets jumped by 25% to 391k lots, a 7-week high. A collapse in the WTI crude oil gross-short to just 20k, at 6-year low, lifted the long/short ratio to almost 21, a 7-year high.
Funds cut their gold net-long by 82% to just 4,000 lots, a 17-month low. The continued capitulation was driven by the biggest two-week jump in the gross-shorts since November 15 as the technical outlook deteriorated below $1,285/oz. The silver net-long exceeded that of gold for the first time since March 2017.
HG Copper longs capitulated in response to a deteriorating macroeconomic outlook led by fears of a Chinese slowdown driven by trade wars and slowing credit growth. The net-short in platinum meanwhile hit a fresh record of 26,000 lots.
The grains sector witnessed another week of heavy selling with funds now once again holding a short position in all of the three major crops. Trade war concerns (US corn to Mexico and soybeans to China) and improved US growing conditions helped create a perfect storm of negative price pressure during June.
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Energy crisis could turn energy stocks into secular winnerWith long-term expected returns for the global energy sector close to 10%, we look at 40 stocks that could be set to cash in.
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.