Article / 21 August 2017 at 8:08 GMT

COT: Copper and gold in demand, grains hit — #SaxoStrats

Head of Commodity Strategy / Saxo Bank
Denmark
  • Funds boosted exposure to precious and industrial metals in week to Aug 15
  • Geopolitical tensions and dovish central banks drove gold towards $1,300/oz
  • HG copper in demand, though struggled to clear $3/lb hurdle
  • Farm commodities sold across the baord
  • WTI selling persisted, but energy sector lifted by increase in natural gas longs

CBOT trading floor
 Chicago Board of Trade trading floor. Photo: Shutterstock

By Ole Hansen

Hedge funds further increased their exposure to metals, both precious and industrial, in the week to August 15. Agricultural commodities saw heavy selling across the board, while the energy sector got a lift from a jump in natural gas longs despite another week of WTI crude oil selling. 

Speculative positioning in Commodities
 
The net long in gold jumped by 41,000 lots to 180,000 lots, the highest since last October. North Korea worries, political friction in the US and dovish signals from the US Federal Reserve and the European Central Bank raised the prospect of a renewed attempt to break resistance at $1,300/oz.

Speculative positioning in COMEX Gold futures
The continued surge among industrial metals on the Shanghai futures exchange also helped attract continued buying of high-grade copper despite it struggling to break above $3/lb. Speculative bets nevertheless reached a new record of 120,000 lots. 

Speculative positioning in HG Copper
Long liquidation in WTI crude oil persisted for a second week in response to weaker price action. But, once again, the reduction was quite small, with support coming from Brent crude where the speculative long has been rising amid improved fundamentals for this the global benchmark. 

COT data covering Brent crude and gas oil will be released by the ICE Europe Exchange today at around 1300 CET 

Speculative positioning in WTI Crude oil
Grain and soybean traders have scrambled to reduce longs and re-establish short positions after a dramatic deterioration in the price outlook since early July. All three major crops were sold, including CBOT wheat where the December contract hit a new contract low.

Grains and soybeans
 
The net short in sugar hit a fresh record as a surge in production – in response to high prices in 2016 – led the International Sugar Organization to reverse a shortage this season to a surplus in the 2017-18 season.
Speculative positioning in Sugar
 

— Edited by John Acher


Ole Hansen is head of commodity strategy at Saxo Bank

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Commitments of Traders: Commodities

21 August
Ole Hansen Ole Hansen
Funds continued to buy Brent crude oil last week while WTI was sold. Bullish bets increased by 4.6% or 18k lots to 419k lots as the North Sea variety continued to benefit from improved fundamentals as seen through its widening backwardation and premium to WTI crude oil.
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