Copper and silver see strong speculative demand
Saxo Bank publishes weekly trader engagement reports (BED) 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.
This summary highlights the futures positions and the changes made by commodities, forex and financial hedge funds until Tuesday, October 19. A week when appetite for risk returned with a vengeance to push the S&P 500 up 4% and the VIX index to a 20-month low. The dollar weakened against a basket of major currencies as bond yields rose, due to rising breakeven points as a more persistent view of inflation began to gain traction. Gains in most commodities, with the exception of softs and natural gas, were offset by a mixed reaction from hedge funds.
A 1.1% rise in the Bloomberg Commodity Index to a new multi-year high has not prompted a buying reaction from hedge funds. Despite large gains, soft and natural gas being the few exceptions, the long net on 24 major futures contracts was cut for a second week.
The buy was made on HG Copper, where an 8.7% rise contributed to a 52% increase in net buy while the 6.1% rally in silver helped triple the net purchase of 14.6,000 lots. Aside from a 15% cut in the notoriously volatile natural gas contract, the reaction in the energy sector has been mixed with demand for diesel and gasoline while the combined net price of crude oil has been reduced for a second week, the purchases of WTI continuing to be offset by the sale of Brent. Meanwhile, long WTI increased by 31,000 lots while Brent long was reduced by 56,000 lots.
In agriculture, massive soybean sales continued, with the long net falling to 18,000 lots, a level last seen only 16 months ago, just before China began. to stock up. Overall, net long positions in corn, soybeans and wheat fell to 220,000 lots, a reduction of 61% from the record high in April. Massive sugar and cocoa sales also contributed to a sharp reduction in bullish bets, while a 4% correction in coffee only reduced the net buy by 1%.
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Crude Oil (OILUKDEC21 & OILUSDEC21) continued to rise in Asia, with Brent crude now trading a striking distance from the 2018 high at $ 86.75, with WTI trading at a new seven-year high. The market remains a bidder, OPEC + sticking to its cautious approach to increasing production, situating the threat to demand still posed by the pandemic. ask this winter. Focus this week on declining stocks in the United States and China, which is facing new outbreaks of Covid-19 after infections spread to 11 provinces.
Gold (XAUUSD) and silver (XAGUSD) The recent streak of gains suffered a temporary setback on Friday in response to a sudden tantrum following comments from Fed Chairman Powell. At the same time, however, he denounced the risk of rising interest rates while expressing his concern at still high inflation. Focus on the dollar which continues to lose steam and bond yields where the recent rise in yields has been mainly driven by a pickup in inflation, thus keeping real yields deep in negative territory. Resistance at $ 1814 followed by the big one at $ 1835.
Cereal prices trade increased, led by wheat which rebounded strongly last week, amid growing demand for all types of wheat and stocks potentially heading towards a five-year low at the end of the 2021-22 season . On top of this spike in fertilizer and fuel prices, costs to farmers are rising and the US three-month weather forecast calls for drought in major growing areas such as Kansas. The benchmark soft winter wheat futures contract (WHEATDEC21) fell to $ 7.63 from $ 7.86, the eight-year high reached in August.
The global dollar long against ten IMM currency futures and the Dollar Index was reduced 3% to $ 24.9 billion in the week to last Tuesday. Still close to the biggest bet on a rising dollar since June 2019, the small global change hid a fair amount of cross activity as specs were notable buyers of CAD, GBP, AUD, and EUR while selling off. CHF and especially JPY continued at a steady pace. JPY’s 26,000 net sales lots brought net net sale to its highest since December 2018, while CHF net sale hit a 22-month high.
After nearly 18 weeks of continuous buying, the Dollar Index has long peaked in two years at 35.9,000 lots, still less than half of the record 81,000 lots in March 2015.
Among the minor currencies, the most notable change was 2.8,000 RUB buying lots, bringing the net long to 22,000 lots, the highest figure since March 2020 just before a collapse in the price of RUB. oil does not drive the ruble down sharply.
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.
Commodities: producer / merchant / processor / user, exchange dealers, managed money and others
Finances: 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 more responsive to changes in fundamental or technical price developments.
- It gives points of view on major trends but also helps to decipher when a turnaround is looming
This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of the Saxo Bank group via RSS feeds on FX Empire