12 September 2016 at 8:17 GMT
- 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.
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...
Buying of gold in response to weaker US data triggered a 17% jump in the net-long to the second-highest level on record.
A third week of continuous selling of HG Copper took the net-short back towards June’s record level.
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.
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.
— Edited by Michael McKenna
Ole Hansen is head of commodity strategy at Saxo Bank