18 December 2017 at 8:16 GMT
- 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.
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.
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.
All three major crops were sold as technical outlook deteriorated once again as the sector remained burdened by heavy supply.
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%.
— Edited by Adam Courtenay
Ole Hansen is head of commodity strategy at Saxo Bank