Head of Commodity Strategy
In FX, speculators sold the USD for a third consecutive week, lifting the gross short against eight IMM futures by USD 2.4 billion to nearly USD 20 billion — the largest non-commercial bet on a weaker dollar since last June. The euro net long rose to 180k contracts (USD 27 billion equivalent), the highest since May 2023 and just 31k contracts below the 2020 record peak. Almost uninterrupted net buying of CAD since November has flipped positioning from a 160k net short to a 13.3k net long — the most bullish stance since 2022. Meanwhile, the AUD, another resource-linked currency, climbed to 33.2k contracts, just 200 contracts shy of the 2024 peak and the highest level since 2017. An unfolding political and economic crisis in the UK provided the only notable support for the dollar, with the GBP net short jumping 86% to 26k contracts, or 2.2 billion USD equivalent. Meanwhile, JPY positioning held steady after Prime Minister Takaichi’s landslide election victory. An initial attempt to weaken the yen was met with verbal intervention from the finance minister and senior currency officials, both signalling readiness to act against excessive volatility — potentially indicating a USDJPY “line in the sand” near 160, above which authorities appear reluctant to tolerate further yen weakness at this stage, a stance that probably helped further challenged the relatively small speculative short position held as of last Tuesday.
The latest COT report, covering managed money positioning in the week to Tuesday, 10 February, captures a period during which the Bloomberg Commodity Index traded broadly flat. Gains in crude oil, gold and, notably, grains were offset by weaknesses across industrial metals — including the semi-industrial precious metals silver and platinum — as well as natural gas, soft commodities and livestock.
In energy, crude oil buying extended to an eighth consecutive week, albeit at a slower pace, with the combined net long in Brent and WTI rising by 10.6k contracts to an eight-month high of 352k. The recent turmoil in gold, silver and platinum — where a historic rally gave way to an equally sharp correction — continued to shape managed money behaviour, with both long and short positions being scaled back, leaving no clear directional signal.
The recent rebound in grains, driven mostly by soybeans in part supported by renewed hopes for Chinese demand, delivered a boost to positioning in soybeans and, by association, corn, while wheat saw net selling ahead of a late-week short-covering squeeze. Overall, the net short across the three main soybean and grain contracts tracked in this report was reduced to just 11k contracts, with a long-held wheat short remaining the primary drag.
The softs sector remains out of favour, with all four contracts seeing net selling. Sugar has been particularly weak, with the net short reaching 2019 highs following months of selling that have seen prices more than halve to below 14 cents per pound.
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:
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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