Article / 12 June 2017 at 9:00 GMT

COT: Gold exposed ahead of FOMC — #SaxoStrats

Head of Commodity Strategy / Saxo Bank
  • Many commodity futures were under pressure in the week ended June 6 
  • Middle East tensions helped trigger a third weekly increase in bullish WTI oil bets
  • Gold vulnerable to profit-taking after a record three-week buying spree
  • Net short in coffee is getting close to the March 2013 record of 30,100 lots
The risk/reward in coffee and sugar is beginning to be skewed 
to the upside after weeks of selling. Photo: Shutterstock

By Ole Hansen

Hedge funds cut bullish exposure across 23 US traded commodity futures and options by 6%, or 34,932 lots, in the week ending June 6. For a second week the bulk of the selling was driven by continued long liquidation of natural gas. 

Selling elsewhere triggered multi-month and — in some cases — near record short positions in sugar, Arabica coffee, soybeans and soybean meal.

Speculative positioning in Commodities

Middle East tensions helped to trigger a third weekly increase in bullish WTI oil bets, primarily due to short positions being reduced. The negative price action, however, showed the current bearish sentiment. An extension sub-$45 could be triggered by long positions capitulating. So far this has not been seen, with the gross-long remaining resilient above 300,000 lots.

WTI Crude oil

Natural gas lost 10% while absorbing 155,000 lots of fund selling during the past three weeks. Last week the net long was cut by one-third.
Natural Gas

Gold has been left vulnerable to profit-taking after a record three-week buying spree of 105,000 lots. In the week up to last Tuesday, the net long jumped by one-third as gold broke the downtrend from 2011. Increased nervousness was seen Thursday and Friday with the double top just below $1,300/oz triggering some profit-taking ahead of a critical week with the Federal Open Market Committee meeting on Wednesday.  

The net short in CBOT corn was cut by one-third, the first sign of the risk to an overall near record grain short into the often volatile growing season.

COT: Grains and soybeans
The risk/reward in coffee and sugar is beginning to be skewed to the upside after weeks of selling. The net short in sugar reached a 22-month high, while the net short in coffee of 27,410 lots is getting close to the March 2013 record of 30,100 lots.


— Edited by Clemens Bomsdorf

Ole Hansen is head of commodity strategy at Saxo Bank 

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Commitments of Leveraged Traders: Commodities

Ole Hansen Ole Hansen
The USDA released its monthly 'World Agriculture Supply and Demand Estimates' (WASDE) on Friday. Supplies of all three major crops were revised higher but the price weakness that followed was relative subdued. This in response to current weather fears with a heatwave currently stressing the recently planted crops. The weekend did not turn out to be as hot as expected across the Midwest and this has caused the weakness in early Monday trading.
The weather threat however is not over yet according to forecasters and it goes to show the increased weather impact on crops during the critical growing season.
Overall the market remain well supplied of all three crops as per the mentioned WASDE report and only a deterioration in growing conditions will support the continued covering of fund short as seen in corn last week.
Ole Hansen Ole Hansen
Funds cut bullish Brent crude oil bets by 12% or 42,000k in week to June 6. Biggest one-week jump in gross-shorts since Nov 8
Market Predator Market Predator
Hello Ole. Interesting disrepancy between speculative change WTI Oil longs between: Nymex & ICE. (Nymex adding; ICE quite significantly reducing) Not very usual, am I right?
Morris Morris
Is there any relationship between the Dollar and Commodity prices? A stronger Dollar positive or otherwise for commodities?


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