Commodity CFTC: Speculative bets on crude at nine-month high

Hedge funds and large investors continued to increase their bets on rising commodity prices. As of last Tuesday they were holding a net long of 1,265,000 futures and options contracts on the 24 commodities we track in this report. This was the highest level in almost five months and represents a nominal value of USD 111.3 billion, up 1.8 billion from the previous report. Out of the 24 commodities investors only hold a negative bias on four which are all within the agricultural sector.

Energy: The on-going rally in energy prices continues to attract speculative buying with the net long in WTI crude rising by 35.4k contracts to 280.8k contracts, the highest level since May 2011 when the Libyan civil war caused a spike in prices. Overall net long exposure to the energy complex, including natural gas, rose by four percent to 428k contracts, primarily driven by the build in WTI crude longs.

Metals: The sector overall shed 2 percent of its net longs to 261k contracts as investors took some money off the table in gold and increased net longs across the other four metals tracked in this report. Gold positions were reduced by 11.9k contracts, most likely caused by the frustration of gold’s inability to break higher from its current 1,700 to 1,760 range. Silver and copper longs increased on expectations for higher industrial demand, especially copper where investors have been slow in rebuilding long exposure. This leaves the price of copper exposed to some potential downside pressures as most of the long positions would have been added above current trading levels.

Grains and soybeans: Most of the action in this sector happened in soybeans with bets on higher prices jumping by 24 percent to a five–month high on strong exports and particular worries about Brazil’s crop output. Overall the long exposure to the sector rose by 4 percent to 308k contracts as reductions in both wheat and corn were more than off-set by the rise in soybeans.

Softs: Investors continued to reduce exposure to this sector for the third week in a row with other sectors currently being preferred. The main change last week was the position in Arabica coffee which switched back to a net short for the first time in three months as speculators jumped on the strong rally in Robusta coffee instead.