Speculator Extremes: Silver, Coffee & Mexican Peso lead COT Positions

By InvestMacro 

The latest update for the weekly Commitment of Traders (COT) report was released by the Commodity Futures Trading Commission (CFTC) on Friday for data ending on April 16th 2024.

This weekly Extreme Positions report highlights the Most Bullish and Most Bearish Positions for the speculator category. Extreme positioning in these markets can foreshadow strong moves in the underlying market.

To signify an extreme position, we use the Strength Index (also known as the COT Index) of each instrument, a common method of measuring COT data. The Strength Index is simply a comparison of current trader positions against the range of positions over the previous 3 years. We use over 80 percent as extremely bullish and under 20 percent as extremely bearish. (Compare Strength Index scores across all markets in the data table or cot leaders table)

Here Are This Week’s Most Bullish Speculator Positions:

Silver

The Silver speculator position comes in as the most bullish extreme standing this week. The Silver speculator level is currently at a 100.0 percent score of its 3-year range.

The six-week trend for the percent strength score totaled 37.9 this week. The overall net speculator position was a total of 53,359 net contracts this week with a small gain of 147 contract in the weekly speculator bets.

Speculators or Non-Commercials Notes:

Speculators, classified as non-commercial traders by the CFTC, are made up of large commodity funds, hedge funds and other significant for-profit participants. The Specs are generally regarded as trend-followers in their behavior towards price action – net speculator bets and prices tend to go in the same directions. These traders often look to buy when prices are rising and sell when prices are falling. To illustrate this point, many times speculator contracts can be found at their most extremes (bullish or bearish) when prices are also close to their highest or lowest levels.

These extreme levels can be dangerous for the large speculators as the trade is most crowded, there is less trading ammunition still sitting on the sidelines to push the trend further and prices have moved a significant distance. When the trend becomes exhausted, some speculators take profits while others look to also exit positions when prices fail to continue in the same direction. This process usually plays out over many months to years and can ultimately create a reverse effect where prices start to fall and speculators start a process of selling when prices are falling.

Coffee

The Coffee speculator position comes next in the extreme standings this week. The Coffee speculator level is now at a 100.0 percent score of its 3-year range.

The six-week trend for the percent strength score was 22.0 this week. The speculator position registered 76,071 net contracts this week with a weekly rise of 2,508 contracts in speculator bets.

Mexican Peso

The Mexican Peso speculator position comes in third this week in the extreme standings. The Mexican Peso speculator level resides at a 94.1 percent score of its 3-year range.

The six-week trend for the speculator strength score came in at 10.4 this week. The overall speculator position was 127,731 net contracts this week with a decrease by -11,960 contracts in the weekly speculator bets.

Copper

The Copper speculator position comes up number four in the extreme standings this week. The Copper speculator level is at a 93.1 percent score of its 3-year range.

The six-week trend for the speculator strength score totaled a change of 59.1 this week. The overall speculator position was 47,569 net contracts this week with an increase by 4,875 contracts in the speculator bets.

Bloomberg Commodity Index

The Bloomberg Commodity Index speculator position rounds out the top five in this week’s bullish extreme standings. The Bloomberg Commodity Index speculator level sits at a 91.2 percent score of its 3-year range. The six-week trend for the speculator strength score was 20.3 this week.

The speculator position was -3,413 net contracts this week with a rise by 277 contracts in the weekly speculator bets.

This Week’s Most Bearish Speculator Positions:

Japanese Yen

The Japanese Yen speculator position comes in as the most bearish extreme standing this week. The Japanese Yen speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -32.1 this week. The overall speculator position was -165,619 net contracts this week with a shortfall of -3,468 contracts in the speculator bets.

Canadian Dollar

The Canadian Dollar speculator position comes in next for the most bearish extreme standing on the week. The Canadian Dollar speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -47.9 this week. The speculator position was -82,815 net contracts this week with a sharp drop by -29,430 contracts in the weekly speculator bets.

Swiss Franc

The Swiss Franc speculator position comes in as third most bearish extreme standing of the week. The Swiss Franc speculator level resides at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -37.5 this week. The overall speculator position was -36,212 net contracts this week with a decline by -4,448 contracts in the speculator bets.

US Dollar Index

The US Dollar Index speculator position comes in as this week’s fourth most bearish extreme standing. The US Dollar Index speculator level is at a 2.9 percent score of its 3-year range.

The six-week trend for the speculator strength score was -8.5 this week. The speculator position was -929 net contracts this week with a small gain of 213 contracts in the weekly speculator bets.

Soybeans

Finally, the Soybeans speculator position comes in as the fifth most bearish extreme standing for this week. The Soybeans speculator level is at a 5.7 percent score of its 3-year range.

The six-week trend for the speculator strength score was 5.7 this week. The speculator position was -171,893 net contracts this week with a drop by -13,416 contracts in the weekly speculator bets.

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*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.