COT: Bullish commodities bets vanish as trade tariffs and growth concerns weigh

Ole Hansen

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. 

Enlarge

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.

Enlarge

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.

Enlarge

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.

Enlarge

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.

Enlarge

You can access both of our platforms from a single Saxo account.

Disclaimer

The Saxo Bank 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 Bank 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 Bank 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 Bank 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 Bank 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 Bank 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 (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)