Article / 12 September 2016 at 8:17 GMT

COT: Crude, copper, and corn sold but gold and coffee stand firm

Head of Commodity Strategy / Saxo Bank
  • Funds reduce bullish commodity bets in crude, copper and corn
  • Coffee and gold the two major exceptions to the trend
  • Gold buying in the wake of poor US data sees 17% surge in net-long

Coffee was one of the few commodities to avoid seeing a reduction 
in hedge funds' net-long position last week. Photo: iStock 

By Ole Hansen

Over the week ending September 6, hedge funds reduced bullish commodity bets for the second week in a row. Selling was broad-based and led by crude oil, copper, and corn with gold and coffee being two of the major exceptions. 

Speculative positioning in Commodities
Table overview:
Speculative positioning in Commodities
Crude oil traders continue to be caught on the wrong side of the market. Last week, the net-long was cut by 19% – primarily due to a big jump in the gross-short. 

This just days before the market surged on the biggest US inventory drop since 1999...

Speculative positioning in WTI Crude oil

Buying of gold in response to weaker US data triggered a 17% jump in the net-long to the second-highest level on record.

Speculative positioning in COMEX Gold futures

A third week of continuous selling of HG Copper took the net-short back towards June’s record level.  
Speculative positioning in HG Copper

The net-short in wheat hit a new record high as world inventories are forecast to rise for a fourth straight year (Source: USDA). 

The move back above $4/bushel have, however, rattled a few shorts but it will probably require a break above $4.11/bushel to get the short-covering ball to roll faster.

Speculative positioning in CBOT Wheat

Arabica coffee net-long jumped by 30% to a near two-year high as the technical and fundamental outlook improved. The failure, however, to break above $1.55/lb helped trigger some long liquidation ahead of the weekend.

Speculative positioning in Arabica Coffee

— Edited by Michael McKenna

Ole Hansen is head of commodity strategy at Saxo Bank

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Commitments of Traders: Commodities

Ole Hansen Ole Hansen
Funds also reduced net-long positions in both Brent crude oil and gas oil last week according to latest update from the ICE exchange. Combined bullish bets on WTI and Brent crude oil were reduced by 13% or 80,000 lots with 56,000 lots of shorts positions being added while existing longs were reduced by 24,000 lots.
Ole Hansen Ole Hansen
Latest crude oil comment: Crude oil gains following the fluke inventory drop were quickly reversed on Friday as focus switched to the weakness coming from stocks and bonds. The weekly rig count rose for a second week and added to the negative sentiment. The monthly report from Opec supported the market’s view of lower oil prices for longer. They flipped their forecast to predict a rebound in non-Opec production next year. They also raised the average 2017 supply surplus to 760,000 barrels/day from 100,000 bpd. Overall the market remains rangebound with CLV6 looking for support at $43.80 followed by $41.40.
Nikhil Nikhil
Market now will be called
Nikhil Nikhil
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