Log in Open account
UAE
CFDs and forex (FX) are complex instruments and come with a high risk of losing money rapidly due to leverage. 62% of retail investor accounts lose money when trading CFDs with this provider.
Show more
CFDs and forex (FX) are complex instruments and come with a high risk of losing money rapidly due to leverage. 62% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs, FX, or any of our other products work and whether you can afford to take the high risk of losing your money.
Show less
COT: Broad buying momentum persists, led by Brent, copper, and grains

COT: Broad buying momentum persists, led by Brent, copper, and grains

Commodities
Ole Hansen

Head of Commodity Strategy

Key points:

  • Our weekly Commitment of Traders update highlights futures positions and changes made by hedge funds across forex and commodities during the week to last Tuesday, 1 October.
  • Heavy selling of EUR and strong buying of AUD the main developements in a week that saw speculators scale back their dollar short
  • Another positive week for the commodities sector saw broad demand with speculators focusing primarily on Brent crude, grains, sugar and live cattle
  • Rising food prices last month helped trigger very aggressive buying across the agriculture sector, led by short covering in grains and soybeans

Forex:

Speculators scaled back their dollar short against eight IMM futures during a reporting week that saw heightened geopolitical tensions following Iran’s missile strike against Israel, US economic data strength, China releasing a mini-bazooka, and European CPI falling below 2% for the first time in three years. Overall, these events triggered heavy selling of EUR and strong buying of AUD, and by the end of last Tuesday, the dollar short had been reduced by USD 1 billion to USD 13.62 billion.

The AUD position flipped to a 14.5k net long from 40k short just two weeks prior, before several stimuli were announced, while, as mentioned, the prospect of the ECB stepping up its rate-cutting pace helped send the EUR lower, resulting in a 23% reduction in the net long. The JPY saw net selling for the first time in thirteen weeks as USDJPY showed signs of rolling over, with US rate cut optimism fading amid strong US economic data, and Japan’s ruling LD party surprisingly picked Ishiba to be its next leader.

Non-commercial IMM futures positions versus the dollar in week to October 1

Commodities:

In the latest reporting week to 1 October, the Bloomberg Commodity Index continued to build on the strong gains seen the previous week, with the 1.2% gain being led by industrial metals on China demand hopes and continued short covering across the agriculture sector, especially grains, on weather worries and China demand optimism. While the Iranian missile attack happened last Tuesday, the impact on prices and positioning was only seen in the following days.

Overall, the combined net long across the 27 major futures contracts tracked in this jumped 40% to 882k contracts, an 11-month high, with the main contributors being Brent crude, grains, sugar, and live cattle, while selling was limited to a few contracts led by WTI crude, gold, and silver.

Managed money long, short and net commodities positions in the week to October 1

Rising food prices fuel fund short-covering


Last month, global food prices, according to the UN FAO, jumped 3%, the most since March 2022, with rising prices seen across all five categories, led by a 10.4% increase in sugar, followed by vegetable oils (+4.6%) and dairy (+3.8%), while cereals, which among others include wheat, corn, and rice, rose by +3%. Overall, the global food price index, which has risen 2.15% in the last year, remains 22.4% below the March 2022 record peak that was reached following Russia’s attack on Ukraine.

The BCOM Agriculture Total Return Index, which tracks 11 major futures contracts across grains, softs, and livestock, rose 12% during a six-week period to 1 October. Responding to, and driving this move were hedge funds as they flipped a massive 539k contract net short to a 293k net long, the bulk of the change being driven by strong buying across the grains and oilseeds contracts, resulting in the net position returning to neutral for the first time in 13 months.

In the past few weeks the net position held by speculators across the 11 contracts included in the Bloomberg Commodity Agriculture Index has flipped back to a net long for the first time this year
Energy: The geopolitical risk spike in crude following Iran’s missile attack on Israel began last Tuesday, but following a week of weakness leading up to that moment, the impact on positioning was limited, with a near doubling of the Brent net long from depressed levels being offset by selling of WTI. The two heavily shorted distillate contracts saw net buying, primarily driven by short covering.
Metals: Gold and silver saw net selling as traders booked profit amid two tired-looking metals following the recent run-up in prices. In gold, it is worth noting that both long and short positions were reduced as recent short sellers feared a geopolitical spike while long-held longs continued to book profit. The copper long continued to build, albeit at a slowing pace, in response to recent China stimulus announcements.
Grains: Short covering across all six contracts accelerated during a sixth consecutive week of buying, especially across the soybean complex on China demand optimism and Brazil production pessimism.
Softs: Hot and dry weather in Brazil, reducing the outlook for sugar production and exports, supported another week of buying, albeit at a slower pace than seen recently. Elsewhere, cocoa and cotton saw demand, while coffee was mixed.

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.

Recent commodity articles:

27 Sept 2024: Commodity weekly: Industrial metals gain strength during a week of crude weakness
26 Sept 2024: Crude prices drop again as Saudi and Libya supply concerns grow
24 Sept 2024: Fed and PBOC add momentum to commodities market rebound
23 Sept 2024: COT: Dollar short reduced; Investment metals see strong demand ahead of FOMC
20 Sept 2024: Commodity weekly: Commodities boosted by bumper rate cut
20 Sept 2024 Video: Gold or silver, which metal will perform the best
17 Sept 2024: With gold reaching new heights, silver shows potential
16 Sept 2024: COT: Record short Brent and gas oil positions add upside risks to energy
11 Sept 2024: Crude slumps amid technical selling and recession fears
10 Sept 2024: US Election: will gold win in all scenarios
9 Sept 2024: COT: Crude long cut to 12-year low; Dollar short more than doubling
5 Sept 2024: Can gold overcome the 'September curse'?
4 Sept 2024: Wheat rises on European crop worries
3 Sept 2024: Chinese economic woes drag down crude oil and copper
2 Sept 2024: COT: Commodities see broad demand as the USD slumps to a net short
30 Aug 2024: Commodities sector eyes fourth weekly gain amid softer dollar and Fed expectations
27 Aug 2024: Month-long sugar slide pauses amid concerns of Brazil's supply
27 Aug 2024: Libya supply disruptions propel crude prices higher
26 Aug 2024: COT: Funds boost metals investment as dollar long positions halve amid weakness
23 Aug 2024: Commodities Weekly: Metal strength counterbalancing energy and grains
22 Aug 2024: Persistent supply contraints keep cocoa prices elevated
21 Aug 2024: Weak demand focus steers crude towards key support
19 Aug 2024: Resilient gold bulls drive price to fresh record above USD 2500
19 Aug 2024: COT Buyers return to crude as gold stays strong; Historic yen buying
16 Aug 2024: Commodities weekly: Gold strong as China weakness drags on other markets
9 Aug 2024: Commodities weekly: Calm returns to markets, including raw materials

Quarterly Outlook

01 /

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

    Read full article
  • Equity Outlook: Will lower rates lift all boats in equities?

    Quarterly Outlook

    Equity Outlook: Will lower rates lift all boats in equities?

    Peter Garnry

    Chief Investment Strategist

    After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto...
    Read full article
  • FX Outlook: USD in limbo amid political and policy jitters

    Quarterly Outlook

    FX Outlook: USD in limbo amid political and policy jitters

    Charu Chanana

    Chief Investment Strategist

    As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ...
    Read full article
  • Macro Outlook: The US rate cut cycle has begun

    Quarterly Outlook

    Macro Outlook: The US rate cut cycle has begun

    Peter Garnry

    Chief Investment Strategist

    The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c...
    Read full article
  • Commodity Outlook: Gold and silver continue to shine bright

    Quarterly Outlook

    Commodity Outlook: Gold and silver continue to shine bright

    Ole Hansen

    Head of Commodity Strategy

    Read full article
  • FX: Risk-on currencies to surge against havens

    Quarterly Outlook

    FX: Risk-on currencies to surge against havens

    Charu Chanana

    Chief Investment Strategist

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo...
    Read full article
  • Equities: Are we blowing bubbles again

    Quarterly Outlook

    Equities: Are we blowing bubbles again

    Peter Garnry

    Chief Investment Strategist

    Explore key trends and opportunities in European equities and electrification theme as market dynami...
    Read full article
  • Macro: Sandcastle economics

    Quarterly Outlook

    Macro: Sandcastle economics

    Peter Garnry

    Chief Investment Strategist

    Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p...
    Read full article
  • Bonds: What to do until inflation stabilises

    Quarterly Outlook

    Bonds: What to do until inflation stabilises

    Althea Spinozzi

    Head of Fixed Income Strategy

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ...
    Read full article
  • Commodities: Energy and grains in focus as metals pause

    Quarterly Outlook

    Commodities: Energy and grains in focus as metals pause

    Ole Hansen

    Head of Commodity Strategy

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities i...
    Read full article

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. This content is not intended to and does not change or expand on the execution-only service. 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)


Business Hills Park – Building 4,
4th Floor, office 401, Dubai Hills Estate, P.O. Box 33641, Dubai, UAE

Contact Saxo

Select region

UAE
UAE
Products & pricing
Platforms
Accounts & service
General
Other
Legal

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

Saxo Bank A/S is licensed by the Danish Financial Supervisory Authority and operates in the UAE under a representative office license issued by the Central bank of the UAE.

The content and material made available on this website and the linked sites are provided by Saxo Bank A/S. It is the sole responsibility of the recipient to ascertain the terms of and comply with any local laws or regulation to which they are subject.

The UAE Representative Office of Saxo Bank A/S markets the Saxo Bank A/S trading platform and the products offered by Saxo Bank A/S.