Article / 27 March 2017 at 7:51 GMT

COT: Commodity short-selling persists, led by grains — #SaxoStrats

Head of Commodity Strategy / Saxo Bank
  • Combined net long for 23 tracked futures has fallen 41% over the past 5 weeks
  • Price weakness in oil, copper, grains and sugar has prompted short-selling 
  • All sectors except metals were sold in week to March 21
  • WTI crude oil selling has taken the net long to a 16-week low
  • Kuwait meeting of Opec and non-Opec producers left the oil market in doubt
  • Gold trading higher today as USD fell after Trump's healthcare bill failure 
Grain silos in North Dakota

Grain silos. Heavy selling of grains and soybeans persisted. 
Photo: Shutterstock

By Ole Hansen

Hedge funds kept up the selling pace in commodities last week. During the past five weeks, the combined net long across the 23 futures tracked in this report has been reduced by 41%. This has come in response to renewed price weakness, especially in oil, copper, grains and sugar. 

Speculative positioning in Commodities
In the week to March 21, the 149,000-lot reduction was primarily driven by increased short selling of 146,000 lots, while the long was reduced by 3,000 lots. All sectors, with the exception of metals, were sold. 

Speculative positioning in Commodities

Four weeks of WTI crude oil selling has taken the net long to a 16-week low. Gross longs are still being reduced while short-selling is on the rise. Crude oil is trading lower on Monday after a joint committee of ministers from Opec and non-Opec producers said they needed more time to stabilise the market. The fact that they agreed to review the market, instead of agreeing to an extension, has left the market in doubt about the ability to reach such an agreement. 

WTI Crude oil
Natural gas was in demand with the net long of the four Henry Hub deliverable contracts rising by 11% to a 34-month high.

Natural Gas

Despite a post-FOMC recovery, the gold net long only recovered 24% of what was sold ahead the March 15 rate hike. Both long and short positions rose, leaving the net long higher by 16,136 lots. Gold is trading higher today as the dollar weakened after US president Donald Trump's failure to push through his healthcare bill. The JPY is up by 1%, while bond yields and stocks are lower. With low investor participation seen so far, a convincing break above gold's 200-day moving average at $1,261/oz is needed to trigger a reaction. 
High-grade copper was bought for the first time in five week, just before the mining strike in Chile ended.
HG Copper
Palladium touched a two-year high last week, helping to drive the net long to a 26-month high.

Heavy selling of grains and soybeans persisted. A big South American crop in soybeans and corn and jitters ahead of the prospective planting report on March 31 weigh on the sector.

Grains and soybeans
Sugar, the hedge fund darling of 2016, continued to be sold, with the net long falling to a one-year low. 
 — Edited by John Acher

Ole Hansen is head of commodity strategy at Saxo Bank

Download document

Commitments of Traders: Commodities


The Saxo Bank Group entities each provide execution-only service and access to 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 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 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 or as a result of the use of the 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. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. 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 ourtrading 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 Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail