Article / 18 December 2017 at 8:16 GMT

COT: End-year commodities exodus, Brent the exception — #SaxoStrats

Head of Commodity Strategy / Saxo Bank
  • Hedge funds went short on commodities, cutting bullish bets by 24%
  • Capitulation continued in gold and silver ahead of the FOMC hike
  • A new record short in Arabica, after funds dumped the coffee

By Ole Hansen

Hedge funds cut bullish commodities bets by a near-record 24% or 415,626 lots in the week to December 12. 

Net-selling hit 21 out of the 26 futures tracked in this. Metals, grains, and soft commodities were particularly hard hit with all futures apart from soybean meal and cotton being sold. 

Speculative positioning in Commodities

Brent crude was one of the few that bucked the trend with the net-long hitting a fresh record of 544,051 lots. 

 Brent crude saw strong net longs, but WTI ended up on an even par. Photo: Shutterstock

This in response to the Fortis pipeline outage which last Tuesday resulted in a temporary rally above $65/barrel. 

WTI crude saw little change with both and long and short seeing a small reduction. 

Speculative positioning in Crude oil
The long capitulation continued in gold and silver ahead of the FOMC rate hike last Wednesday.

In the past two weeks funds have cut the gold net-long by a record 124,000 lots while silver turned net-short for only the second time this year.  

Speculative positioning in gold and silver futures
All three major crops were sold as technical outlook deteriorated once again as the sector remained burdened by heavy supply. 

Speculative positioning in grains and beans
Soft commodities with the exception of cotton saw heavy selling as sugar, coffee and cocoa traded close to year lows. 

Sugar turned net-short again after funds dumped 83,000 lots primarily due to fresh short selling. A new record short in Arabica coffee after funds increased the net-short by 46%.

Speculative positioning in soft commodities
— Edited by Adam Courtenay 

Ole Hansen is head of commodity strategy at Saxo Bank
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Commitments of Traders: Managed money position in commodities


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