Speculator Extremes: Live Cattle, Brent, 5-Year & Wheat top Bullish & Bearish 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 1st.

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:

Live Cattle

The Live Cattle speculator position comes in as the most bullish extreme standing this week as the Live Cattle speculator level rose to a 100.0 percent score of its 3-year range.

The six-week trend for the percent strength score totaled 14.8 this week. The overall net speculator position was a total of 123,646 net contracts this week with a gain of 5,659 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.

Brent Oil

The Brent Oil speculator position comes next in the extreme standings this week after a spot at the 6th most bullish last week. The Brent Oil speculator level is now at a 96.4 percent score of its 3-year range.

The six-week trend for the percent strength score was 49.2 this week showing a sharp move higher. The speculator position registered -2,843 net contracts this week with a weekly boost by 3,685 contracts in speculator bets.

Japanese Yen

The Japanese Yen speculator position comes in third this week in the extreme standings after topping the list last week. The Japanese Yen speculator level resides at a 96.2 percent score of its 3-year range.

The six-week trend for the speculator strength score came in at 19.2 this week. The overall speculator position was 121,774 net contracts with a decline of -3,602 contracts in the weekly speculator bets.

Silver

The Silver speculator position comes up number four (same as last week) in the extreme standings this week. The Silver speculator level is currently at a 88.5 percent score over its 3-year range.

The six-week trend for the speculator strength score totaled a small gain of 3.5 this week. The overall speculator position was 57,258 net contracts this week with a dip by -3,692 contracts in the speculator bets.

Brazil Real

The Brazil Real speculator position rounds out the top five in this week’s bullish extreme standings. The Brazil Real speculator level currently sits at a 87.4 percent score over its 3-year range. The six-week trend for the speculator strength score was a strong 34.3 this week.

The speculator position totaled 37,035 net contracts this week with a reduction by -3,314 contracts in the weekly speculator bets.

This Week’s Most Bearish Speculator Positions:

5-Year Bond

The 5-Year Bond speculator position comes in as the most bearish extreme standing again this week as the 5-Year Bond speculator level dropped to a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -14.8 this week. The overall speculator position was -2,021,677 net contracts this week with a drop of -121,590 contracts in the speculator bets.

Wheat

The Wheat speculator position comes in tied for the most bearish extreme standing on the week with the Wheat speculator level now at 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was strong -50.2 this week. The speculator position totaled -102,800 net contracts this week with a decrease by -20,252 contracts in the weekly speculator bets.

Soybean Meal

The Soybean Meal speculator position comes in as third most bearish extreme standing of the week. The Soybean Meal speculator level resides at a 5.1 percent score of its 3-year range.

The six-week trend for the speculator strength score was -13.4 this week while the overall speculator position was -54,300 net contracts this week with a decline of -5,022 contracts in the speculator bets.

Cotton

The Cotton speculator position comes in as this week’s fourth most bearish extreme standing. The Cotton speculator level is at a 12.3 percent score of its 3-year range.

The six-week trend for the speculator strength score was a modest -3.0 this week while the speculator position totaled -41,979 net contracts with a rise by 12,027 contracts in the weekly speculator bets.

New Zealand Dollar

Finally, the New Zealand Dollar speculator position comes in as the fifth most bearish extreme standing for a second straight week. The New Zealand Dollar speculator level is currently at a 12.4 percent score of its 3-year range.

The six-week trend for the speculator strength score was a positive 8.2 this week. The speculator position was a total of -45,048 net contracts with a decrease by -3,481 contracts in the weekly speculator bets.

Article By InvestMacro – Receive our weekly COT Newsletter

*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.