Article / 05 February 2018 at 8:28 GMT

COT: Funds cover grain shorts; crude oil longs cut – #SaxoStrats

Head of Commodity Strategy / Saxo Bank
  • Natural gas saw strong buying in week to January 30
  • Short-covering across the grain complex featured too
  • Bullish commodities bets held by funds rose 16%
 Natural gas had its moment in the sun in late January. Pic: Shutterstock

By Ole Hansen

Strong buying in natural gas and heavy short-covering across the grain complex were the main drivers behind a 16% increase in bullish commodities bets held by funds in the week to January 30. There were record longs in oil products while crude oil saw the first small reduction in six weeks. Gold buying continued for a 7th week, albeit at a modest pace.

Speculative positioning in Commodities

The first small reduction in bullish crude oil bets in six weeks as the rally since last June showed signs of stalling. This came after the price of WTI and Brent both retraced 50% of the 2014 to 2016 selloff. 

Speculative positioning in Crude oil
The net-long across the four Henry Hub deliverable natural gas contracts jumped by 23% to a 6-months high of 323,000 lots. This came just before the price slumped by 10% as the stocks draw eased and warmer weather was being forecast for early February.

Buying of gold continued for a 7th week albeit at a modest pace. This happened after the yellow metal once again found resistance above $1350/oz. with an adverse spike in real yields only being partly offset by emerging stock market weakness.

Speculative positioning in COMEX Gold futures
The net-long in HG copper reached an eight-week low. During this time the price has remained range-bound within the established range between $3 and $3.3/lb. Softer demand outlook from China ahead of Lunar New Year and the stock market wobble have both helped reduce the belief in higher prices for now.

Speculative positioning in COMEX Copper
Aggressive short-covering triggered a net purchase of 240,000 lots across the grain and soy complex. Weather worries in South America supported corn and soybeans while dry conditions in Kansas and Oklahoma supported a price surge in wheat, not least hard red winter wheat traded on the KCBT.

Speculative positioning in key crops

The net-short in sugar extended to a record as the market continued to struggle amid rising supplies. Despite continued fund selling, sugar managed to hold above 13 cents/lb support and  despite negative fundamentals, a break above 13.75 cents could now force some short-covering. 

Speculative positioning in Sugar

– Edited by Clare MacCarthy


Ole Hansen is head of commodity strategy at Saxo Bank

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COT on Commodities in the week to January 30

Logich Logich
Any idea what triggered the spike in Copper today, Ole S. Hansen?
peter peter
Short covering on coffee this time?


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