To download your copy of the Commitment of Traders: Commodity report for the week ending June 4, click here.
Hedge funds increased bets on rising commodity prices across 24 major futures contracts by 57% to 401k lots during the week to June 4. The report, however, showed some major differences across the three sectors as trade wars, recession risks, dollar movements and planting delays all played their different parts.
The aggressive selling of oil, natural gas and copper and the concurrent strong buying of gold and grains have left these commodities exposed to some short term retracements should a change in the fundamental or technical outlook occur.
The silver net-short was cut in half to 20k lots but the fact that this move failed to reduce its multi-decade discount to gold will keep recent buyers worried.
The market will now turn its focus to today’s WASDE report from the US Department of Agriculture at 16:00 GMT. It will show the US government’s forecasts for how much the troubled planting season has altered projections for production, yield and stocks.
The Commitments of Traders (COT) report is issued by the US Commodity Futures Trading Commission (CFTC) every Friday at 15:30 EST with data from the week ending the previous Tuesday. The report breaks down the open interest across major futures markets from bonds, stock index, currencies and commodities. The ICE Futures Europe Exchange issues a similar report, also on Fridays, covering Brent crude oil and gas oil.
In commodities, the open interest is broken into the following categories: Producer/Merchant/Processor/User; Swap Dealers; Managed Money and other.
In financials the categories are Dealer/Intermediary; Asset Manager/Institutional; Managed Money and other.
Our focus is primarily on the behaviour of Managed Money traders such as commodity trading advisors (CTA), commodity pool operators (CPO), and unregistered funds.
They are likely to have tight stops and no underlying exposure that is being hedged. This makes them most reactive to changes in fundamental or technical price developments. It provides views about major trends but also helps to decipher when a reversal is looming.
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