Article / 30 May 2016 at 6:47 GMT

COT: Metals lead pack in broad-based commodity selling

Head of Commodity Strategy / Saxo Bank
  • Net-long across 22 commodities dropped by 13% - five metals were hardest hit
  • Gold net-long was cut by 26% to a seven-week low
  • Copper exposed to short-covering - and that was what happened this week
 Major dent: The big metals, including gold and copper, have been sold short. Photo: iStock

By Ole Hansen

The strong demand for dollars last week was reflected in commodities where the net-long across 22 commodities dropped by 13% to 1.1 million lots. The metal sector was the hardest hit with all five tracked here seeing reductions.

Speculative positioning in Commodities

Source: Bloomberg/Saxo Bank

Table overview
Speculative positioning in Commodities
Source: CFTC/Bloomberg/Saxo Bank

Gold net-long was cut by 26% to a seven-week low. At the beginning of May the net-long jumped 27% in a single week while the price was trading above $1250. The continued weakness had left many nursing losses and exposure has been cut.

Speculative positioning in COMEX Gold futures
Source: Bloomberg/Saxo Bank
Oil traders took profit on long positions while WTI crude continued its ascent towards $50/b. The reduction of short positions at the same time left the net long down by just 2%.  

Speculative positioning in WTI Crude oil
Source: Bloomberg/Saxo Bank

From an elevated long to a near record short in just three weeks had left copper exposed to short-covering and that was what we got this past week after the price failed to break support in the $2 to $2.04 area.

Speculative positioning in HG Copper
Source: Bloomberg/Saxo Bank

The phenomenal rally in soymeal during the past six weeks on supply concerns in Argentina continued to attract buyers with the net-long rising to a two-year high

-- Edited by Adam Courtenay

Ole Hansen is head of commodity strategy at Saxo Bank.

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