Article / 28 August 2017 at 9:00 GMT

COT: Metals shine in a week of widespread reductions — #SaxoStrats

Head of Commodity Strategy / Saxo Bank
  • Funds cut bullish commodity bets in week to August 22
  • Gold net-long, conversely, rose 9% to 196,331 lots
  • Agriculture 'particularly hard hit in recent weeks'

Houston flooded: the impact of Hurricane Harvey has yet 
to be fully understood by markets. Photo: Shutterstock

By Ole Hansen

Hedge funds cut bullish commodity bets by 18% in the week to August 22 as widespread reductions hit most commodities with the exception of metals, which continued to be bought. 

All energy contracts, grains and soft commodities were sold, not least WTI crude oil, corn, wheat, sugar, and coffee.

Speculative positioning in Commodities

Despite seeing gold's advance stall ahead of key resistance, funds nevertheless bought the yellow metal for a fifth consecutive week. 

The net-long rose 9% to 196,331 lots last week. This the biggest bet on rising prices since last October has been driven by continued demand from investors looking to diversify amid rising Trump uncertainty, a weaker dollar, geopolitical risks with the focus on North Korea, and the recent stock market wobble. 
Speculative positioning in COMEX Gold futures

WTI crude oil was sold for a third week as traders began worrying that the third bull cycle since March was going to end in failure like the previous two. Ahead of Hurricane Harvey, gasoline net-longs were cut by 7% primarily due to a reduction in the gross-long. The net-long was 58% of the one-year high.

Oil and gasoline

The short term (let alone the long-term) impact of Hurricane Harvey has yet to be fully understood. The initial reaction has been to send gasoline higher as refineries halts production while sending crude oil lower on reduced refinery demand. Supplies of crude oil have also been impacted due to a reduction in supplies both from offshore and onshore (shale) producers. 

Lower imports should also be felt, but for now the real impact is yet to be determined with the refinery shutdowns receiving most of the attention. 

The agriculture sector has been particularly hard hit in recent weeks with funds holding a combined short positions in both grains and soft commodities. 

Grains and soybeans

Hardest hit was CBOT corn where aggressive short-selling saw the return of a net-short position.
Speculative positioning in CBOT Corn
Soft commodities:
Soft commodities
The sugar net-short hit a record high after jumping 15%. This latest selling helps to explain the strong price bounce after the Brazilian government slapped a price supportive tax on excess imports of ethanol last week. 

This is a move that could help divert sugar cane demand away from the sweetener to fuel thereby potentially support a reduction in stocks.

Speculative positioning in Sugar
 — Edited by Michael McKenna

Ole Hansen is head of commodity strategy at Saxo Bank

Download document

Commitments of Traders: Commodities

citymoments citymoments
go against hedge funds, in this business, you are either a contrarian or a victim.


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail