Commodity CFTC: Oil demand firm while grains are dumped

Hedge funds and large investors maintained their exposure of nominal USD 80 billion in the 24 US traded commodities that we track. This number however hides some major changes between the different sectors. The total net long position of futures and options contracts actually fell by 5 percent due to a massive long liquidation in the grain sector, where the nominal contract size is relatively small, while all other sectors, especially metals, saw an increase.







Copper moved to a long position while soybean oil moved the other way as speculators maintained a net short exposure to 6 of the 24 commodities we track.

Exposure to the energy sector rose by 7 percent as investors net bought all four energy groups, especially WTI crude where longs rose by 9k to  243k contracts, the highest level since May last year. Worries about Iranian sanctions and improved US economic data have kept the long position elevated for months. The chronic natural gas short was reduced as bottom fishing triggered by an oversold situation has kicked in after a month-long collapse in prices.

Hedge funds finally reacted to the relentless rally in industrial metals by becoming net long of HG copper for the first time in 2 months. This change also helps explain the strong rally seen recently but also raises the question whether copper has much further to go near-term. Investors continue, albeit at a slow pace, to increase exposure to precious metals as the upward trend remains in tact.

The impact of the price bearish USDA report was felt on grains last week as investors dumped one third of their long positions with corn taking the brunt of the selling with a 42k reduction to 197k contracts.

Exposure to the soft sector rose by 12 percent as investors continue to move back into coffee and sugar.

Background information: The Commitments of Traders is a report issued by the Commodity Futures Trading Commission every Friday with data from the previous Tuesday. It comprises the holdings of participants in various U.S. futures markets split into "commercial" and "non commercial" holdings. The non commercial or speculative holding are typically institutional investors such as hedge funds and CTAs. Analysts and investors follow changes in these positions because such transactions can reflect an expectation of a change in prices.