COT: Surging yields drive broad commodity weakness and long liquidation COT: Surging yields drive broad commodity weakness and long liquidation COT: Surging yields drive broad commodity weakness and long liquidation

COT: Surging yields drive broad commodity weakness and long liquidation

Ole Hansen

Head of Commodity Strategy

Summary:  Our weekly Commitment of Traders update highlights future positions and changes made by hedge funds and other speculators across commodities and forex during the week to Tuesday, October 3. A week that saw worsening risk appetite across markets in response to a continued surge in bond yields and the dollar reaching a fresh high for the year. In commodities, the market responded to a broad sell off by cutting bullish bets across 24 major futures markets by 15% to a four month low.

Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities while in forex we use the broader measure called non-commercial.

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.



This brief summary highlights futures positions and changes made by hedge funds across commodities and forex in the week to last Tuesday, October 3. A week saw a worsening risk appetite across markets in response to a continued surge in bond yields, with the US 10-year yield rising 26 bps to reached a fresh 16-year high, while the dollar reached fresh high for the year. In commodities, the market responded to a 1.8% broad sell off in the Bloomberg Commodity Index by cutting bullish bets across 24 major futures markets by 15% to a four month low.

Hedge funds turned broad sellers in the week to October 3 with the BCOM index dropping 1.8% amid rising yields and a stronger dollar. Selling being led by crude oil, gold, soybeans, sugar, cocoa and livestock being only partly offset by demand for copper, natgas and cotton.
Crude oil and fuel products: Hedge funds reacted to an emerging correction in crude oil by cutting their WTI and Brent long by 33k lots to 525k, thereby making a small reduction in the 170k lots that was bought during a three-week period last month. Since July 1, the WTI net long has surged 235k to 307k while the Brent long has risen by 58.5k to 218k. While WTI has been supported by tightening supplies at Cushing, funds have kept a low interest in Brent with growth concerns partly offsetting current tight supply worries.
Gold, silver and copper: The yield and dollar spike triggered accelerated fund selling of precious metals in the week to last Tuesday. Funds held a net gold short (-38.6k to -3k) for the first time since November while heavy selling of silver and platinum also resulted in net short positions. A development that left them exposed to today's short covering action on increased geopolitical tensions.
In grains and soybeans, another week of selling saw the combined net short across six soy and grain contracts reach a July 2020 high at 195k lots. Selling of soybeans (-25k to 5k) and both wheat contracts being only partly offset by short covering in corn (+9k to -159k)
Softs & Livestock: Selling also extended to the softs sector with heavy long liquidation seen in sugar and cocoa while cotton buying saw the net long reach a 15-month high. All three livestock contracts seeing selling led by the lean hogs contract
In forex, a tenth week of net dollar buying saw the speculative long against eight IMM futures more than doubling to a one-year high at $10.9 billion. Selling was particularly aggressive in EURUSD (-19.5k or $2.6bn equivalent), GBP (-22.3k or $1.7 bn) and CHF (-7.7k or $1 bn), and only partly offset by demand for AUD, NZD and MXN.
Breaking down the individual forex positions we find speculators hold net short IMM positions against the dollar with the EUR and MXN being the exeptions. Since hitting a cycle peak in May, the EUR net long has slumped by 58% to the current 79k lots (€9.9 bn). The biggest shorts are held in JPY (-$9.7bn) and AUD (-$5.2bn)


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 Inspiration Disclaimer and (v) Notices applying to Trade Inspiration, 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 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.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.