Details Cookies
Cookie policy

This website uses cookies to offer you a better browsing experience by enabling, optimising and analysing site operations, as well as to provide personalised ad content and allow you to connect to social media. By choosing “Accept all” you consent to the use of cookies and the related processing of personal data. Select “Manage consent” to manage your consent preferences. You can change your preferences or retract your consent at any time via the cookie policy page. Please view our cookie policy here and our privacy policy here

COT: Commodities hurt by trade wars and stronger dollar COT: Commodities hurt by trade wars and stronger dollar COT: Commodities hurt by trade wars and stronger dollar

COT: Commodities hurt by trade wars and stronger dollar

Ole Hansen

Head of Commodity Strategy

Please click to access the COT commodities report for the week ending July 17, 2018.

Having returned from my summer break I find markets that have yet to settle down and exhibit the tight trading ranges that normally occurs this time of year. Instead we have commodity markets still being ravaged by the "trade war equals lower growth and demand narrative". 

After reaching a three-year high back in May, the Bloomberg Commodity Index has since succumbed to a near 10% correction before recovering last week after President Trump went on the offensive against the stronger dollar, another key component to the price weakness witnessed during the past few months. 

Gold and other commodities found a bid last week as the dollar weakened after  Trump tweeted that China and the European Union have been manipulating their currencies. 

The year-to-date performance, including roll, of the key commodities that make up the Bloomberg Commodity index shows how Brent and WTI, despite the recent setback, remain two of the best performing commodities so far this year. A few agriculture commodities led by cocoa and cotton, together with nickel, also trade in the black while major losses have been seen among industrial metals, natural gas and the soft commodities of sugar and coffee. 

Source: Bloomberg, Saxo Bank

As a result of these developments, leveraged funds have spent the past few months cutting exposure in some commodities while accumulating new short positions in others.  During the week to July 17 funds cut bullish commodities bets by 30% to 783,000 lots, a 13-month low. The energy sector led by crude oil remains the only sector where funds maintain an overall bullish position with net-short positions now being held in metals, grains and softs.

Table covering hedge funds positions and changes in the week to July 17:

Hardest hit last week was interestingly enough the energy sector which saw heavy selling across all six contracts. Not least crude oil where the combined net-long in WTI and Brent slumped by 129,000 lots to 777,000 lots, a nine-month low. This was the biggest weekly reduction since April 2017 and was driven by rising demand concerns related to the ongoing trade war and reduced worries about tightening supply after recent supply outage concerns began to ease. 

Gold’s continued slump to a one-year low helped trigger another week of heavy short-selling by funds. The net-short reached 22,000 lots, just shy of the 24,000 lots record seen in December 2015. Back then this bearish view was reached just before the first US rate hike signalled a low point from where gold rallied strongly. The current gross-short of 132,000 lots has never been seen bigger and it has left gold in a much better position to react to price-friendly news such as last week’s attack on the stronger dollar by President Trump.

HG copper and industrial metals in general have been hurt by the "trade war leading to lower growth" narrative. As a result, funds continued to accumulate fresh copper short positions last week with the net-short jumping by 84% to 24,000 lots, a 22-month high. Platinum’s record short continued to rise while funds were the least bullish on palladium since 2012.

Selling of the three major crops slowed as trade war concerns were being somewhat offset by weather concerns, not least related to wheat. The combined net-short reached 184k lots, a far cry from the record 406k long seen just four months ago.

In soft commodities the net-short in coffee hit a new record high at 90,000 lots while additional short positions were added to sugar. The cotton long/short ratio meanwhile reached 30.5, a 7½ year high after longs were added and short positions were reduced after the US on July 12 cut one million bales from its harvest forecast. With more than 30 longs per one short this market could be at risk should price-friendly news dry out and/or the technical outlook show signs of deteriorating.


The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (
- Full disclaimer (

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region


Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.