28 Jan

Speculators Weekly: Soybean Meal, Heating Oil & Wheat lead Bullish & Bearish Positions

January 28, 2023

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 January 24th.

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:

Soybean Meal


The Soybean Meal speculator position comes in as the most bullish extreme standing again this week and has been for multiple weeks. The Soybean Meal speculator level is currently at a 92.3 percent score of its 3-year range.

The six-week trend for the percent strength score totaled 7.5 this week. The overall net speculator position was a total of 149,785 net contracts this week with a change of -16,565 contract in the weekly speculator bets.

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Heating Oil


The Heating Oil speculator position comes next in the extreme standings this week. The Heating Oil speculator level is now at a 79.7 percent score of its 3-year range.

The six-week trend for the percent strength score was 11.8 this week. The speculator position registered 25,360 net contracts this week with a weekly change of 6,854 contracts in speculator bets.

Euro


The Euro speculator position comes in third this week in the extreme standings. The Euro speculator level resides at a 76.2 percent score of its 3-year range.

The six-week trend for the speculator strength score came in at 3.0 this week. The overall speculator position was 134,349 net contracts this week with a change of 7,365 contracts in the weekly speculator bets.

VIX


The VIX speculator position comes up number four in the extreme standings this week. The VIX speculator level is at a 76.0 percent score of its 3-year range.

The six-week trend for the speculator strength score totaled a change of 20.6 this week. The overall speculator position was -53,149 net contracts this week with a change of -794 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 sits at a 70.3 percent score of its 3-year range. The six-week trend for the speculator strength score was 20.7 this week.

The speculator position was 22,785 net contracts this week with a change of 592 contracts in the weekly speculator bets.

This Week’s Most Bearish Speculator Positions:

Wheat


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

The six-week trend for the speculator strength score was -7.6 this week. The overall speculator position was -48,320 net contracts this week with a change of -6,306 contracts in the speculator bets.

Ultra 10-Year U.S. T-Note


The Ultra 10-Year U.S. T-Note speculator position comes in next for the most bearish extreme standing on the week. The Ultra 10-Year U.S. T-Note speculator level is at a 0.1 percent score of its 3-year range.

The six-week trend for the speculator strength score was -6.1 this week. The speculator position was -125,911 net contracts this week with a change of 410 contracts in the weekly speculator bets.

Lean Hogs


The Lean Hogs speculator position comes in as third most bearish extreme standing of the week. The Lean Hogs speculator level resides at a 0.4 percent score of its 3-year range.

The six-week trend for the speculator strength score was -36.8 this week. The overall speculator position was 3,166 net contracts this week with a change of -12,741 contracts in the speculator bets.

10-Year Note


The 10-Year Note speculator position comes in as this week’s fourth most bearish extreme standing. The 10-Year Note speculator level is at a 0.4 percent score of its 3-year range.

The six-week trend for the speculator strength score was -22.8 this week. The speculator position was -541,821 net contracts this week with a change of 3,236 contracts in the weekly speculator bets.

MSCI EAFE MINI


Finally, the MSCI EAFE MINI speculator position comes in as the fifth most bearish extreme standing for this week. The MSCI EAFE MINI speculator level is at a 2.4 percent score of its 3-year range.

The six-week trend for the speculator strength score was -23.7 this week. The speculator position was -34,202 net contracts this week with a change of -5,924 contracts 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.

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.


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