COT: Speculators Start to Embrace Sugar and Coffee

The COT report is published each week and includes observations on charts of markets that exhibit interesting ownership characteristics and/or changes in ownership characteristics. This week’s update includes observations on crude oi, coffee, and sugar.

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  • Crude Oil longs starting to give up
  • Extreme speculative buying in coffee
  • Extreme speculative buying in sugar

52 Week Ownership Profile Extremes – U.S. Dollar Index, Euro, Crude Oil, Frozen OJ

13 Week Volume Highs – U.S. Dollar Index, Japanese Yen, Canadian Dollar, 10 Yr. U.S. T-Note, Nasdaq, Nikkei 

Currencies Indexes Interest Rates Metals 
US Dollar100S&P 5004730 Yr US Bond12Gold24
Euro0NASDAQ 1001810 Year US Note26Silver35
British Pound20Dow315 Year US Note55Copper16
Swiss Franc47Nikkei122 Year US Note2Platinum69
Japanese Yen37Eurodollar92
Canadian Dollar63
Australian Dollar14
New Zealand Dollar22
Mexican Peso10
Energies Agriculture Meats Softs 
Crude Oil0Wheat47Lean Hogs65Coffee98
Heating Oil20Hard Red Winter Wheat26Live Cattle51Cotton4
RBOB Gas26Corn57Feeder Cattle2Frozen OJ0
Natural Gas100Oats61Cocoa16
Soybeans24Sugar98
Soybean Oil39
Soybean Meal18
Rough Rice31

The COT Index is the difference between net speculative positioning and net commercial positioning measured over a 52 week percentile.  A reading of 100 indicates that the difference in positioning is the greatest it has been in 52 weeks with speculators buying and commercials selling.  A reading of 0 indicates that the difference in positioning is the greatest it has been in 52 weeks with speculators selling and commercials buying.  Speculators tend to be on the wrong side at the turn and commercials the correct side.  Use of the index is covered closely in detail in my book.

Latest CFTC Release dated October 23rd, 2018

Non Commercials (speculators) – Red

Commercials – Blue

Small Speculators – Black

COTDiff (COT Index) – Black

52 week Percentile (COT Diff) – Gray

 

Crude Oil NYMEX Continuous Contract

The ownership profile in crude oil has moderated substantially.  The speculative net long position does remain large relative to a multiyear lookback period but is the lowest in 52 weeks.  The 4 week change in positions (see chart below) is extreme and suggests that crude could be sold out enough to attempt a rally.  The 4 week change in positions measured the change in net speculative positioning minus the change in net commercial positioning.

Crude Oil NYMEX Continuous Contract

 

Coffee ICE Continuous Contract

The 4 week change in coffee positions is extreme.  Of course, this is what happens when absolute positioning stretches to obscene levels.  The implication is that the coffee rally is due for a pause.

Sugar ICE Continuous Contract

The 4 week change in sugar positions is extreme (although not on par with coffee).  Red dots indicate 4 week position changes that are at least as large as the current reading.  Similar to coffee, the implication is that the sugar rally is due for a pause.