Saxo Financial institution publishes weekly dealer engagement experiences (COT) overlaying leveraged fund positions in commodities, bonds and inventory index futures. For IMM and VIX foreign money futures, we use the bigger measure known as non-trading.

The abstract under highlights futures positions and modifications made by hedge funds in commodities, foreign exchange, bonds and inventory indices till Tuesday, March 2. 1.61% in response to reasonable demand in a seven-year public sale.

The transfer despatched shares tumbling down as larger borrowing prices made it more durable to justify the surge in valuations, because the greenback bulldozed most of its friends, hitting close to a three-high. month. Commodities traded decrease and regardless of the present sturdy fundamentals, the market feared that rising bond yields might set off a discount in near-record hypothesis lengthy held by funds.

Primary merchandise

Speculators made their greatest discount in every week in bullish commodity bets since mid-November. Regardless of the deal with reflation and strengthening fundamentals, the rout within the bond market and the appreciation of the greenback have raised new issues that deleveraging might unfold to commodities. The lengthy web complete of the highest 26 commodity futures contracts was decreased by 4% to 2.7 million tons, representing a face worth of $ 132.3 billion.

All however a handful of contracts have been bought, with the most important discount in gold, soybeans and corn, whereas probably the most notable shopping for curiosity went to cocoa and wheat.

Vitality

Crude oil traded decrease within the week to March 2, with revenue taking rising because the greenback strengthened and expectations rose that OPEC +, at its March 4 assembly , would enhance manufacturing to 1.5 million barrels from April. The weak spot, nevertheless, solely triggered a small discount in threat from the funds, with the mixed net-long of WTI (-3.7k) and Brent (-3.8k) decreased to 728k tons. With web lengthy remaining near the best degree since October 2018, nevertheless, the 7.6k discount was the biggest on a weekly foundation since early November, simply earlier than vaccine information helped begin the rally by 80%. noticed since then.

Metals

In gold, the continued lack of momentum in response to rising actual yields, significantly after falling under $ 1,760 / ounce, contributed to the continued flight of funds. Web lengthy fell a 3rd to a 22-month low of 57.9k tons on a mix of lengthy liquidation and new quick gross sales, a improvement that noticed the long-short ratio drop under 2 for the primary time since Could 2019.

In silver and platinum the selloff was extra reasonable given the tailwind of commercial metals and with that some relative power to gold. The online-long in each circumstances has been decreased by round 20% to a seven and a month low respectively.

Revenue-taking continued in HG copper and regardless of rising 1% for the week, web lengthy was decreased for a second week to 65.5k tons, the bottom since August. Simply earlier than Thursday, when the breakout under the help at $ 4.04 / lb triggered a speedy drop to $ 3.85 / lb earlier than recovering.

Agriculture

The grains sector, apart from CBOT wheat, was bought due to a mix of normal threat discount and a stronger greenback. The biggest reductions in soybeans (-16.8k) adopted by corn (-12.6k). Commodities have been combined after a number of weeks of web shopping for, with probably the most notable change being an 83% enhance in lengthy cocoa and a 9% discount in cotton after worth discovered resistance earlier than the 2018 excessive at 95.60 cents per pound.

Regardless of bulldozing most of its friends in response to rising actual yields, the greenback is working in opposition to ten IMM foreign money futures and the greenback index has seen solely a 5% discount to 29.6 billion. {dollars}, the bottom since mid-December. As in earlier weeks, the primary contributors to the quick hedging of the greenback got here from the EUR and JPY the place speculators decreased lengthy positions by 3 billion greenback equal. The lengthy euro was lower to an eight-month low because it struggled to carry above help at € 1.1950, a degree it lastly broke on Friday.

The reason for not seeing a larger discount within the greenback quick could be discovered within the continuation of the rally in commodities, which lifted CAD lengthy positions by 68% whereas the AUD returned to a web lengthy for the primary time in 5 weeks. Speculators prolonged their buy of kilos into week 5 and the 16% enhance to 36k tons was the most important wager in three years. This regardless of rising indicators that the sturdy streak of good points in February had began to falter.

Monetary

US rate of interest futures merchants made sharp curve positioning modifications within the week to March 2. The interval included the February 25 washout that was sparked by a disastrous 7-year ticket public sale. Please observe that the info under displays the positions held by leveraged funds, which regularly maintain a part of their ahead publicity within the type of spreads in opposition to different rate of interest merchandise, and for this Fairly, we frequently discover them shopping for in weak bonds whereas promoting in power. Many of the reverse place is often held by asset managers / establishments and brokers / intermediaries.

What’s the Dealer Engagement Report?

COT experiences are printed by the US Commodity Futures Buying and selling Fee (CFTC) and the ICE Alternate Europe for Brent crude oil and diesel. They’re launched each Friday after the US shut with information for the week ending the earlier Tuesday. They break down the open curiosity of the futures markets into totally different consumer teams based mostly on the asset class.

Commodities: Producer / Service provider / Processor / Person, Swap Sellers, Cash administration and different
Monetary companies: concessionaire / middleman; Asset supervisor / institutional; Leverage funds and different
Foreign exchange: a large distribution between business and non business (speculators)

The the reason why we primarily deal with the conduct of the highlighted teams are:

  • They’re prone to have tight stops and no underlying publicity who is roofed
  • This makes them most conscious of modifications within the evolution of basic or technical costs
  • It supplies views on main traits but in addition helps to decipher when a reversal is imminent

Ole Hansen, Head of commodity technique at Saxo Financial institution.

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This text is supplied by Saxo Capital Markets (Australia) Pty. Ltd, which is a part of Saxo Financial institution



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