Article / 12 March 2018 at 8:26 GMT

COT: Commodities bets at one-year high on agricultural surge

Head of Commodity Strategy / Saxo Bank
  • Softs, grains bought in week ending March 6
  • Funds reduce bullish oil bets
  • Silver/gold ratio dips below 80

By Ole Hansen

Hedge funds increased bullish commodity bets by 9% to 2.2 million lots in the week to March 6. Buying was once again concentrated in agriculture commodities where both softs and grains were bought. The energy sector with the exception of natural gas was sold while metals were mixed with buying of precious metals being offset by HG copper selling. 

Speculative positioning in Commodities

Speculative positioning in Commodities

It was a relatively quiet week in energy with funds responding to the current lack of direction by reducing bullish oil bets in WTI and Brent by a combined 24,000 lots to 985,000 lots.
Speculative positioning in Crude oil

An equally quiet week in precious metals with speculators buying gold following the rejection and subsequent bounce from support at $1,300/oz. Silver’s record short was reduced for the first time in five weeks as the ratio to gold began dipping below 80.

Speculative positioning in gold and silver futures

The bullish sentiment towards copper took another hit with the net-long being cut by 30% to a 16-month low. The combination of worries about China's economic performance and the tariff announcement by President Trump has taking its toll on the short-term outlook for industrial metals. 

The last time the net-long was this low at just 28,700 lots,copper traded 30% lower than where it is today. 

Speculative positioning in HG Copper
Fund buying of key crops accelerated further last week with a total of 188,000 lots being added to the almost 700,000 lots that was bought during the previous six weeks. Drought in Argentina and the US plains has been the fundamental driver behind the surge in demand. Following last Thursday’s supply and demand update from the US government, some profit-taking began to emerge leaving thousands of recently established longs vulnerable.

COT on grains and soybeans
The net-long in soybeans and corn both reached a 20-month high while the 116,000 long in soybean meal was a new record.

– Edited by Michael McKenna
Ole Hansen is head of commodity strategy at Saxo Bank
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COT on commodities in the week to March 6

Anatoly Vyacheslav Anatoly Vyacheslav
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