As a result, the dollar strengthened, yields fell as commodities traded lower, due to losses in energy and industrial metals, while gold and most agricultural commodities recorded net purchases.

Saxo Bank publishes weekly Trader Engagement (COT) reports covering leveraged fund positions in commodities, bonds and stock index futures. For IMM and VIX currency futures, we use the larger measure called non-trading.

The summary below highlights the futures positions and the changes made by hedge funds in commodities, forex and financials until Tuesday August 17th. renewed growth in stock turns, a stronger dollar, and somewhat surprising and weaker bond yields.

The latter is potentially driven by the adversity of emerging risks caused by the continued spread of the delta coronavirus variant as well as lower input costs due to falling commodity prices.

A relatively weak decline in the Bloomberg Commodity Index driven by a further decline in both energy and industry was partly offset by continued purchases of grains and soft drinks, as well as renewed demand for ‘gold.


The Bloomberg Spot Index traded lower in the week to August 17, but only 0.4% as losses in energy and industrial metals were partially offset by strength in the agricultural sector and the resumption of gold purchases. The rotation resulted in the combined purchase of 24 major commodity futures contracts remaining unchanged at 2.2 million lots, with the largest reductions affecting Brent crude oil, natural gas and copper, while strong demand was observed for gold, corn and cocoa.


In response to lingering concerns over Covid-19 demand, speculators cut their long combined WTI and Brent crude oil from a total of 31.2k to 534k, a nine-month low. All energy contracts, including natural gas, resulted in net sales.

Monday morning commentary

Crude Oil (OILUSOCT21 & OILUKOCT21) along with most other commodities started the week with gains in response to improved risk appetite, particularly supported by a weaker dollar. Last week’s collapse, the worst in three years for oil, was sparked by the delta variant, concerns about Chinese growth and the prospect of a reduction in stimulus from the Federal Reserve.

As the virus remains a threat to the near-term demand outlook, despite signs of improving the situation in China, this week’s Jackson Hole summit could give the market some insight into when to cut back (see below). Double dips appeared on Brent at $ 64.50 and WTI at $ 62, as speculators reduced bullish oil bets to a 9-month low in the week to August 17.


The strong rally following the August 9 flash crash helped speculative long gold rise 52% to 77.6k lots as silver, troubled by its link to the drop in industrial metals, saw its net length collapsed to a 26-month low at just 9.7,000 lots. Copper’s worst collapse in two months contributed to a second week of selling, which saw the net buy 38% on the week at 20,000 lots. Platinum, which recently saw its discount on gold hit $ 800 from less than $ 500 last month, has seen a small amount of buying after speculators recently built the biggest net sell in two years.

Monday morning commentary

Gold started the week in relatively good shape after managing to ignore last week’s strength in the dollar and a renewed rally in real yields. It remains below the important psychological level of $ 1,800, however, as the market takes a wait-and-see approach as investors await Jackson Hole later this week for more information on the Federal Reserve’s political outlook. Silver (XAGUSD) has recovered some of last week’s losses with XAUXAG trading at 76.80 after hitting 77.75 a few trading sessions ago.

HG Copper (COPPERDEC21) continues to rally after last week’s collapse on signs of support from China, where stock levels fell and local premiums above the LME spot rose in response to efforts government to tackle the recent virus outbreak. In addition, the risk of strike disruption in Chile remains with a large number of mines in contract renewal talks, with unions at two mines currently on strike.

The strong rally of less than $ 4 / pound, maintaining a double bottom, along with the favorable long-term outlook for copper helped to attract new buys and short hedging. First resistance level at $ 4.215 followed by $ 4.295.


The widespread purchasing of key crops helped lift the grain industry from purchasing 45,000 lots to a ten-week high of 544,000 lots. By far the biggest exposure remains corn, followed by soybeans and now increasingly also wheat, with wheat traded in Kansas and Chicago having seen increased demand in recent weeks. In softs, all contracts saw net buying led by sugar, with long net peaking at five years, and cotton which peaked at three years at 82,000 lots. Cocoa returned to a net long position as coffee was bought despite lower trading during the week.


Speculators nearly halved their recently established dollar in the week to August 17. The selloff, however, was concentrated against the euro where an initial rejection to € 1.17 and a subsequent rebound to € 1.18 contributed to a 70% increase (equivalent to $ 3.5 billion) in EUR net long at a five-week high of 57.6,000 lots. Long positions that were immediately challenged by the renewed weakness of the euro towards the end of last week, when general adversity to risk helped to strengthen the dollar again below € 1.17.

While most of the other major currencies led by the CHF, JPY and CAD continued, the overall reduction of the net long dollar against ten IMM currency futures and the dollar index was reduced by 2.3 billion dollars to 2.6 billion dollars.

What is the Merchant 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 in futures markets into different user groups based on asset class.

  • Merchandise: Producer / Merchant / Processor / User, Swap dealers, Managed money and other
  • Finance: Dealer / Intermediary; Asset manager / Institutional; Leverage funds and other
  • 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 who is covered
  • This makes them most responsive to changes in the evolution of fundamental or technical prices
  • It provides views on major trends but also helps to decipher when a reversal is imminent

Ole Hansen, Head of Commodity Strategy at Saxo Bank.


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

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