Commodity Fund hits new high



Basic products

Speculators increased bullish bets on 24 major commodity futures contracts by 5% to a new high of 2.7 million lots, with a face value of $ 143.7 billion. Extreme positions above or near year-long highs have been seen for several commodities, from crude oil to commodities to copper HG, corn, wheat and cattle. A post-pandemic growth sprint, combined with tight supply and continued demand for reflation hedges, helped push the Bloomberg Commodity Index up 3.1% to a 27-month high.

Energy

The continued rally in crude oil allowed Brent to cross $ 60 / bbl for the first time in a year. The move brought the combined net long of Brent and WTI to a 28-month high at 727.5k lots, still 33% below the March 2018 record of 1.1 million lots. While short-term momentum indicators started calling for consolidation last week, long-short ratios remain low, indicating speculative duration has even more room for improvement before the trade starts showing. cluttered. A cold snap in the US stretching all the way to Texas supported the price of natural gas and last week the speculative net rose 6% to 348,000 lots, the season’s highest bullish bet since 2014 .

Metals

Gold’s inability to respond to external market developments resulted in a reduction in long and short positions, leaving the net unchanged and close to a 20-month low. Money saw a small 2% cut as the recent Reddit-inspired shopping spree continued to fade. Industrial metals soared with platinum surging 9% triggering a one-third increase in net long to 28.8k lots. HG copper attracted 10,000 lots of fresh buys, with the long net reaching a nine-week high of 87.6,000 lots.

Agriculture

The grain sector saw a pickup in buying with the long combined of six contracts reaching 790,000 lots, not far from the record 824,000 lots in August 2012. The market bought grain ahead of last Tuesday’s WASDE report which s ultimately turned out to be less optimistic than the market had expected. Especially corn weakened in the following days after USDA projected higher than expected supplies. Soybeans were pulled lower along with corn despite a tighter supply outlook, while wheat fell, even as the agency lowered its view of world stocks by more than expected.

Forex

Speculators continued to reduce their short position in the dollar during the week through February 9. Despite strong dollar weakness, the greenback is short against ten IMM currency futures and the dollar index nonetheless fell 2% to $ 31.4 billion, an eight-week low. Overall, flows were mixed, with the sale of JPY (10k lots), CAD (6.6k) and CHF (3.3k) partially offset by demand for GBP (11.5k) and EUR ( 3.2k)

Financial

In fixed income, the managed currency category was net buyers of all bond maturities other than ultras. The most notable buys in the 5, where the reduction of 206,000 lots from the net short to a three-year low at 491,000 lots was equivalent to a change of $ 11 million per basis point (DV01). The 10-year-old net jumped in length a third to 219,000 lots, the highest reading in 6-1 / 2 years. The “everything” rally in stocks helped drive the Cboe VIX to a one-year record high of 138,000 lots, still well below the record 218,000 lots in November 2019.

What is the Trader Engagement Report?

COT reports are published by the US Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and diesel. They are released every Friday after the US close with data for the week ending the previous Tuesday. They break down the open interest of the futures markets into different user groups based on the asset class.

Basic products: Producer / Merchant / Processor / User, Swap dealers, Money management and others
Financial: Dealer / Intermediary; Asset manager / institutional; Leverage funds and others
Forex: A wide distribution between commercial and non-commercial (speculators)

The reasons why we mainly focus on the behavior of the highlighted groups are:

  • They are likely to have tight stops and no underlying exposure covered
  • This makes them the most responsive to changes in the evolution of fundamental or technical prices.
  • It provides views on major trends but also helps decipher when a reversal is looming

Ole Hansen, Head of commodity strategy at Saxo Bank.

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This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, which is part of the Saxo Bank group via RSS feeds on FX Empire



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