background image

COT report: Wholesale reductions in speculators' USD and commodity longs

Key points:

  • Our weekly Commitment of Traders update highlights futures positions and changes made by hedge funds across forex and commodities during the week ending Tuesday, 4 March, 2025.
  • Speculators sold USD for a seventh consecutive week, reducing the dollar long versus eight IMM futures by 72% from the mid-January peak.
  • Accelerated selling was seen across all commodities sectors, led by agriculture, on heightened tariff focus.
  • The grains sector witnessed the biggest one-week reduction in two years on China's countermeasures.
  • WTI long rises from a 15-year low on short covering, while Brent longs see the biggest cut since July
  • Gold and copper net selling driven by a combination of long liquidation and fresh short selling.

Forex:

In the forex market, speculators sold USD for a seventh consecutive week, reducing the dollar long versus eight IMM futures by 37% to USD 9.6 billion, the lowest since October, and down 72% from the mid-January peak that was reached just ahead of Trump's combatant inauguration speech, which set the tone for the new US administration. Buyers concentrated their focus on three major currencies, led by the JPY, which saw the net long jump 39% to a fresh record high at 134k contracts, or USD 11.3 billion equivalent. The technical breakout in EURUSD helped reduce the net short by 60% to 10k contracts (USD 2.1 billion), while the GBP long reached 18.6k contracts (USD 1.1 billion). Partly offsetting these were small amounts of net selling of CAD, AUD, NZD, and MXN.

10olh_cot1
Non-commercial IMM forex futures positions versus the dollar in week to 4 March 2025

Commodities:

A second week of broad and accelerated risk aversion and rising volatility saw all sectors and most contracts covered in this update being exposed to net selling. This occurred during a reporting week that, despite a weaker dollar, saw the Bloomberg Commodities Index drop 1.4% as hedge funds lowered their overall exposure amid rising volatility and after Trump's on-again, off-again tariff strategy caused a great deal of confusion and, in some sectors, demand concerns. Not least the agriculture sector, where China's counter tariff move helped trigger the biggest one-week selling of key crops in two years.

Overall, the combined net long across the 27 major futures contracts tracked in this update was cut by 410k contracts to 1.07 million, the lowest since December, with all sectors seeing net selling led by the agriculture sector (333k contracts), with the bulk of the reduction seen across the soy and grains sector.

On an individual level, only WTI and natural gas saw notable buying, with buyers covering short positions in the US crude contract following a slump to a 15-year low in the previous week, while natural gas continues to benefit from rising demand, both domestically in the US and towards exports via LNG. As mentioned, selling was broad, and apart from the agriculture sector being led by Brent after hedge funds cut bullish bets by the most since July as prices temporarily dropped to levels last seen in 2021. The gasoil (diesel) contract flipped to a net short while gold and copper both witnessed net selling despite continued price strength, potentially signalling lower risk appetite in response to rising volatility.

10olh_cot2
Managed money commodities long, short and net positions, as well as changes in the week to 4 March
10olh_cot3
Energy
10olh_cot4
Precious and industrial metals
10olh_cot5b
Grains and oilseed futures
10olh_cot6
Softs and livestock

What is the Commitments of Traders report?

The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class.

Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and other
Financials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and other
Forex: A broad breakdown between commercial and non-commercial (speculators)

The main reasons why we focus primarily on the behavior of speculators, such as hedge funds and trend-following CTA's are:

  • They are likely to have tight stops and no underlying exposure that is being hedged
  • This makes them most reactive to changes in fundamental or technical price developments
  • It provides views about major trends but also helps to decipher when a reversal is looming

Do note that this group tends to anticipate, accelerate, and amplify price changes that have been set in motion by fundamentals. Being followers of momentum, this strategy often sees this group of traders buy into strength and sell into weakness, meaning that they are often found holding the biggest long near the peak of a cycle or the biggest short position ahead of a through in the market.


Recent commodity articles:

7 Mch 2025: Commodities Weekly: Tariffs, trade tensions, fiscal bazooka, and Ukraine
5 Mch 2025: 
Tariff threat disconnects HG copper from global market
4 Mch 2025: 
Stagflation and geopolitical tensions fuel renewed demand for gold
3 Mch 2025: 
COT Report: Broad retreat sees WTI longs slump to 15-year low
28 Feb 2025: 
Commodities weekly: Broad weakness as tariff fatigue sets in
24 Feb 2025: 
COT Report: traders turn selective despite ongoing broad rally
21 Feb 2025: 
Commodities weekly: energy market strength and Trump rethoric fuel surge
18 Feb 2025: 
COT report: crude, gold and grains see mild profit taking
5 Feb 2025: 
Broad Strength Drives Commodities sector to 26-month High
4 Feb 2025: 
Crude Oil Wipes Out 2025 Gains as Tariffs and Demand Weighs
3 Feb 2025: 
COT Report: Mixed Week Seen Ahead of Trump's Tariff Offensive
1 Feb 2025: 
YouTube: Joining Kevin Muir on The Market Huddle podcast
31 Jan 2025: 
Commodities weekly: Strong January led by precious metals
29 Jan 2025: 
Agriculture sector rally led by coffee, corn and cattle
27 Jan 2025: 
COT Report: Commodity buying extends to fourth week
24 Jan 2025: 
Commodities weekly: Trump tariff threats and energy agenda in focus
23 Jan 2025: 
Crude oil weakens amid tariff uncertainty
22 Jan 2025: 
Gold and silver see fresh gains as Trump 2.0 era begins
20 Jan 2025: 
COT Report: Elevated commodities longs face short-term risks
17 Jan 2025: 
Commodities weekly: Strong January rally pauses ahead of Trump
15 Jan 2025: 
Q1 2025 Commodity outlook: A bumpy road ahead calls for diversification
14 Jan 2025: 
COT Report: Hedge fund long jumps to 17-month high led by crude, gas and metals
13 Jan 2025: 
Crude oil rally amid winter demand and Russian sanctions
10 Jan 2025: 
Commodities weekly: Strong start to the year led by energy and metals
7 Jan 2025: 
COT Report: Managed money's year-end positioning in forex and commodities

Podcasts that include commodities focus:

7 Mch 2025: 
US bear market risks ratchet higher. EUR train has left the station
4 March 2025: 
Are we on the verge of a big whoosh?
25 Feb 2025: 
Meltdown risks are rising. What to watch next
18 Feb 2025: 
Europe is on fire
5 Feb 2025: 
Mag 7 risks underappreciated? 
3 Feb 2025: 
If new Trump tariffs stick, markets have only just begun to react
31 Jan 2025: 
Does the market think Trump is bluffing?
29 Jan 2025: 
The DeepSeek winners emerge
27 Jan 2025: 
DeepSeeking missile strikes global markets
24 Jan 2025: 
Four days in, Trump continues to dominate headlines, but ...
20 Jan 2025: 
Trump 2.0 swings into action
17 Jan 2025:
 Brace for Monday, as a new era begins

Disclaimer

Confidentiality and Usage:
You may not reproduce, distribute, or transmit this material or any portion thereof without prior written permission from Saxo.

Nature of Information:
The information provided herein is based on current market conditions and analysts' opinions, which may reflect personal views of the author, and are subject to change without notice. This material does not include a record of any trading prices, or an offer of, or solicitation for, or endorsement to enter into any transaction in any investment product. Any forecast on the economy, markets and economic trends of the markets provided is not necessarily indicative of the future or likely performance of the investment product subject of this material.

Responsibility and Liability:
Saxo accepts no liability for any use that may be made of these comments or for any consequences that arise from such use. Saxo does not guarantee the accuracy or completeness of any information provided and assumes no liability for any errors, omissions, losses, or damages resulting from the use of this information.

The information provided in this material is solely for information only. It is intended for general circulation and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. Accordingly, it should not be relied on or treated as a substitute for specific advice concerning specific situations of any person. Please seek advice from a financial adviser regarding the suitability of any investment product taking into account your specific investment objectives, financial situation or particular needs before you make a commitment to purchase an investment product. In the event that you choose not to seek advice from a financial adviser, you should consider whether any investment product mentioned in this publication is suitable for you.

Notwithstanding the above, insofar as any information provided herein contains research analyses or reports concerning any investment product authored by any foreign research house and is issued or promulgated to a person in Singapore who is not an accredited investor, expert investor, and/or institutional investor, Saxo Capital Market Pte. Ltd. accepts legal responsibility for the contents of this material to the extent required by law. Recipients of such material are to contact Saxo Capital Markets Pte. Ltd. in respect of any matters arising from, or in connection with, this material.

Risk Disclosure:
Trading in investment products involve significant risk, including the risk of losing your entire investment. Historical returns are not a guarantee of future returns. Prices can both rise and fall, and there is a risk that you will not get back the money you invested.

Conflicts of interest:
The author may hold positions in the investment products mentioned. The author does not own positions in the underlying investment product exceeding 0.5% of its market capitalisation, save as otherwise declared. The author is not permitted to trade the mentioned investment products within the first 24 hours after the publication of this article.

Saxo maintains partnerships with companies that compensate Saxo for promotional activities conducted on its platform. Additionally, Saxo has agreements with certain partners who provide retrocession contingent upon clients purchasing specific investment products offered by these partners. While Saxo receives compensation from these partnerships, all content is conducted with the intention of providing clients with valuable options and information.

Publication details:
If any listed companies are the subject of the material, the content has not been submitted to the companies in question prior to publication.

Please refer to our full disclaimer and notification on non-independent investment research for more details.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Singapore
Singapore

Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Saxo is part of the J. Safra Sarasin Group.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-sg/about-us/awards.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.