Soft Commodities

Archive for Soft Commodities – Page 9

Soft Commodity Speculators drop Cotton bets for 12th time in 13 weeks

Here are the latest charts and statistics for the Commitment of Traders (COT) reports data published by the Commodities Futures Trading Commission (CFTC).

The latest COT data is updated through Tuesday November 29th and shows a quick view of how large traders (for-profit speculators and commercial entities) were positioned in the futures markets.

Weekly Speculator Changes led by Corn & Soybeans

The COT soft commodities speculator bets were slightly lower this week as five out of the eleven soft commodities markets we cover had higher positioning this week while the other six markets had decreases in contracts.

Leading the gains for soft commodities markets was Corn (21,477 contracts) with Soybeans (16,969 contracts), Soybean Oil (4,333 contracts), Coffee (1,550 contracts) and Soybean Meal (1,269 contracts) also showing positive weeks.

The softs market leading the declines in speculator bets this week was Sugar (-8,927 contracts) with Lean Hogs (-8,233 contracts), Wheat (-5,787 contracts), Cocoa (-5,586 contracts), Live Cattle (-1,481 contracts) and Cotton (-1,143 contracts) also registering lower bets on the week.

Highlighting the COT soft commodities data this week is the continued decline in Cotton‘s speculator positioning. The large speculator bets for Cotton have declined for three straight weeks and in twelve out of the past thirteen weeks. Overall, Cotton bets have dropped by a total of -35,187 contracts in the past thirteen weeks going from a standing of +51,767 total net contracts on August 30th to just +16,580 total net contracts this week.

Cotton futures prices have been in sharp retreat since late-August as well. The front-month futures price settled on Friday at just over $83.00 which is down almost 30 percent from August 30th. Cotton prices are also down by approximately 47 percent from the 2022 high-point reached in early May at over $155.95.

Data Snapshot of Commodity Market Traders | Columns Legend

Nov-29-2022	OI	OI-Index	Spec-Net	Spec-Index	Com-Net	COM-Index	Smalls-Net	Smalls-Index
WTI Crude	1,412,121	1	239,739	8	-262,654	93	22,915	37
Gold	433,661	1	110,003	19	-119,233	82	9,230	3
Silver	121,258	0	17,483	33	-28,997	68	11,514	26
Copper	146,760	0	1,984	38	-3,362	64	1,378	33
Palladium	7,537	8	-1,631	14	1,687	84	-56	38
Platinum	66,468	33	24,259	42	-28,762	60	4,503	28
Natural Gas	985,010	7	-163,429	30	136,191	74	27,238	45
Brent	155,500	15	-32,087	57	29,424	42	2,663	45
Heating Oil	266,829	23	30,733	88	-48,255	20	17,522	59
Soybeans	634,754	13	87,208	40	-61,551	68	-25,657	28
Corn	1,226,410	0	270,242	65	-231,169	39	-39,073	21
Coffee	196,365	9	-14,636	2	13,695	99	941	12
Sugar	876,309	34	179,035	56	-222,607	39	43,572	62
Wheat	310,667	10	-33,305	0	37,024	100	-3,719	91

Soybean Meal tops Strength Scores

Strength Scores (a normalized measure of Speculator positions over a 3-Year range, from 0 to 100 where above 80 is extreme bullish and below 20 is extreme bearish) showed that Soybean Meal (84.5 percent) and Soybean Oil (74.3 percent) lead the soft commodity markets with Soybean Meal residing in a bullish extreme position (above 80 percent). Corn (64.6 percent) and Sugar (55.6 percent) come in as the next highest soft commodity markets in strength scores.

On the downside, Wheat (0.0 percent), Coffee (1.8 percent) and Cotton (19.9 percent) come in at the lowest strength level currently and are all in bearish extreme levels (below 20 percent).

Strength Statistics:
Corn (64.6 percent) vs Corn previous week (61.8 percent)
Sugar (55.6 percent) vs Sugar previous week (58.6 percent)
Coffee (1.8 percent) vs Coffee previous week (0.0 percent)
Soybeans (40.1 percent) vs Soybeans previous week (34.9 percent)
Soybean Oil (74.3 percent) vs Soybean Oil previous week (71.4 percent)
Soybean Meal (84.5 percent) vs Soybean Meal previous week (83.7 percent)
Live Cattle (47.1 percent) vs Live Cattle previous week (49.0 percent)
Lean Hogs (45.4 percent) vs Lean Hogs previous week (54.4 percent)
Cotton (19.9 percent) vs Cotton previous week (20.8 percent)
Cocoa (26.4 percent) vs Cocoa previous week (32.0 percent)
Wheat (0.0 percent) vs Wheat previous week (6.1 percent)

Strength Trends led Soybean Oil & Sugar

Strength Score Trends (or move index, calculates the 6-week changes in strength scores) showed that Soybean Oil (18.9 percent) and Sugar (18.1 percent) lead the past six weeks trends for soft commodity markets this week. Live Cattle (15.5 percent), Soybeans (10.0 percent) and Lean Hogs (9.2 percent) fill out the top movers in the latest trends data.

Coffee (-38.9 percent), Wheat (-31.2 percent) and Cotton (-12.2 percent) lead the downside trend scores currently.

Strength Trend Statistics:
Corn (-5.4 percent) vs Corn previous week (-9.8 percent)
Sugar (18.1 percent) vs Sugar previous week (29.8 percent)
Coffee (-38.9 percent) vs Coffee previous week (-65.2 percent)
Soybeans (10.0 percent) vs Soybeans previous week (4.4 percent)
Soybean Oil (18.9 percent) vs Soybean Oil previous week (28.6 percent)
Soybean Meal (1.8 percent) vs Soybean Meal previous week (2.5 percent)
Live Cattle (15.5 percent) vs Live Cattle previous week (19.9 percent)
Lean Hogs (9.2 percent) vs Lean Hogs previous week (26.8 percent)
Cotton (-12.2 percent) vs Cotton previous week (-13.9 percent)
Cocoa (-1.5 percent) vs Cocoa previous week (1.6 percent)
Wheat (-31.2 percent) vs Wheat previous week (-26.7 percent)

Individual Soft Commodities Markets:

CORN Futures:

The CORN large speculator standing this week totaled a net position of 270,242 contracts in the data reported through Tuesday. This was a weekly increase of 21,477 contracts from the previous week which had a total of 248,765 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 64.6 percent. The commercials are Bearish with a score of 39.0 percent and the small traders (not shown in chart) are Bearish with a score of 20.6 percent.

CORN Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	29.4	45.1	10.0
– Percent of Open Interest Shorts:	7.3	63.9	13.2
– Net Position:	270,242	-231,169	-39,073
– Gross Longs:	360,350	552,816	122,723
– Gross Shorts:	90,108	783,985	161,796
– Long to Short Ratio:	4.0 to 1	0.7 to 1	0.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	64.6	39.0	20.6
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-5.4	2.6	13.9

SUGAR Futures:

The SUGAR large speculator standing this week totaled a net position of 179,035 contracts in the data reported through Tuesday. This was a weekly reduction of -8,927 contracts from the previous week which had a total of 187,962 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 55.6 percent. The commercials are Bearish with a score of 39.3 percent and the small traders (not shown in chart) are Bullish with a score of 61.7 percent.

SUGAR Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	32.3	45.2	10.7
– Percent of Open Interest Shorts:	11.8	70.6	5.8
– Net Position:	179,035	-222,607	43,572
– Gross Longs:	282,793	396,433	94,194
– Gross Shorts:	103,758	619,040	50,622
– Long to Short Ratio:	2.7 to 1	0.6 to 1	1.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	55.6	39.3	61.7
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	18.1	-16.6	6.6

COFFEE Futures:

The COFFEE large speculator standing this week totaled a net position of -14,636 contracts in the data reported through Tuesday. This was a weekly advance of 1,550 contracts from the previous week which had a total of -16,186 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 1.8 percent. The commercials are Bullish-Extreme with a score of 98.8 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 12.5 percent.

COFFEE Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	18.2	56.0	4.6
– Percent of Open Interest Shorts:	25.7	49.1	4.1
– Net Position:	-14,636	13,695	941
– Gross Longs:	35,834	110,025	9,075
– Gross Shorts:	50,470	96,330	8,134
– Long to Short Ratio:	0.7 to 1	1.1 to 1	1.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	1.8	98.8	12.5
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-38.9	38.8	-20.1

SOYBEANS Futures:

The SOYBEANS large speculator standing this week totaled a net position of 87,208 contracts in the data reported through Tuesday. This was a weekly increase of 16,969 contracts from the previous week which had a total of 70,239 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 40.1 percent. The commercials are Bullish with a score of 67.7 percent and the small traders (not shown in chart) are Bearish with a score of 27.7 percent.

SOYBEANS Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	23.8	50.8	7.8
– Percent of Open Interest Shorts:	10.1	60.5	11.9
– Net Position:	87,208	-61,551	-25,657
– Gross Longs:	151,317	322,231	49,683
– Gross Shorts:	64,109	383,782	75,340
– Long to Short Ratio:	2.4 to 1	0.8 to 1	0.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	40.1	67.7	27.7
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	10.0	-9.6	-2.7

SOYBEAN OIL Futures:

The SOYBEAN OIL large speculator standing this week totaled a net position of 103,854 contracts in the data reported through Tuesday. This was a weekly increase of 4,333 contracts from the previous week which had a total of 99,521 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 74.3 percent. The commercials are Bearish with a score of 26.8 percent and the small traders (not shown in chart) are Bullish with a score of 62.1 percent.

SOYBEAN OIL Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	30.8	41.2	7.5
– Percent of Open Interest Shorts:	7.4	67.5	4.6
– Net Position:	103,854	-116,889	13,035
– Gross Longs:	136,812	183,315	33,560
– Gross Shorts:	32,958	300,204	20,525
– Long to Short Ratio:	4.2 to 1	0.6 to 1	1.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	74.3	26.8	62.1
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	18.9	-15.9	-8.1

SOYBEAN MEAL Futures:

The SOYBEAN MEAL large speculator standing this week totaled a net position of 102,339 contracts in the data reported through Tuesday. This was a weekly advance of 1,269 contracts from the previous week which had a total of 101,070 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 84.5 percent. The commercials are Bearish-Extreme with a score of 19.4 percent and the small traders (not shown in chart) are Bearish with a score of 36.1 percent.

SOYBEAN MEAL Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	33.1	40.4	11.9
– Percent of Open Interest Shorts:	5.4	73.4	6.5
– Net Position:	102,339	-122,247	19,908
– Gross Longs:	122,479	149,139	43,937
– Gross Shorts:	20,140	271,386	24,029
– Long to Short Ratio:	6.1 to 1	0.5 to 1	1.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	84.5	19.4	36.1
– Strength Index Reading (3 Year Range):	Bullish-Extreme	Bearish-Extreme	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	1.8	-0.1	-15.8

LIVE CATTLE Futures:

The LIVE CATTLE large speculator standing this week totaled a net position of 54,034 contracts in the data reported through Tuesday. This was a weekly lowering of -1,481 contracts from the previous week which had a total of 55,515 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 47.1 percent. The commercials are Bearish with a score of 41.4 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 86.5 percent.

LIVE CATTLE Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	36.7	33.1	11.5
– Percent of Open Interest Shorts:	18.0	51.2	12.0
– Net Position:	54,034	-52,522	-1,512
– Gross Longs:	106,265	95,838	33,215
– Gross Shorts:	52,231	148,360	34,727
– Long to Short Ratio:	2.0 to 1	0.6 to 1	1.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	47.1	41.4	86.5
– Strength Index Reading (3 Year Range):	Bearish	Bearish	Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	15.5	-14.3	-7.7

LEAN HOGS Futures:

The LEAN HOGS large speculator standing this week totaled a net position of 35,499 contracts in the data reported through Tuesday. This was a weekly decrease of -8,233 contracts from the previous week which had a total of 43,732 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 45.4 percent. The commercials are Bullish with a score of 63.4 percent and the small traders (not shown in chart) are Bearish with a score of 44.5 percent.

LEAN HOGS Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	38.0	35.4	7.9
– Percent of Open Interest Shorts:	19.7	48.6	13.1
– Net Position:	35,499	-25,480	-10,019
– Gross Longs:	73,573	68,586	15,357
– Gross Shorts:	38,074	94,066	25,376
– Long to Short Ratio:	1.9 to 1	0.7 to 1	0.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	45.4	63.4	44.5
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	9.2	-6.5	-15.2

COTTON Futures:

The COTTON large speculator standing this week totaled a net position of 16,580 contracts in the data reported through Tuesday. This was a weekly fall of -1,143 contracts from the previous week which had a total of 17,723 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 19.9 percent. The commercials are Bullish-Extreme with a score of 80.3 percent and the small traders (not shown in chart) are Bearish with a score of 20.6 percent.

COTTON Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	32.6	47.8	6.6
– Percent of Open Interest Shorts:	24.1	57.1	5.7
– Net Position:	16,580	-18,172	1,592
– Gross Longs:	63,352	92,854	12,743
– Gross Shorts:	46,772	111,026	11,151
– Long to Short Ratio:	1.4 to 1	0.8 to 1	1.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	19.9	80.3	20.6
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-12.2	11.2	-0.5

COCOA Futures:

The COCOA large speculator standing this week totaled a net position of 9,698 contracts in the data reported through Tuesday. This was a weekly fall of -5,586 contracts from the previous week which had a total of 15,284 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 26.4 percent. The commercials are Bullish with a score of 74.3 percent and the small traders (not shown in chart) are Bearish with a score of 32.8 percent.

COCOA Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	31.1	47.7	4.4
– Percent of Open Interest Shorts:	27.4	52.8	3.0
– Net Position:	9,698	-13,322	3,624
– Gross Longs:	80,762	123,639	11,404
– Gross Shorts:	71,064	136,961	7,780
– Long to Short Ratio:	1.1 to 1	0.9 to 1	1.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	26.4	74.3	32.8
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-1.5	-0.9	24.0

WHEAT Futures:

The WHEAT large speculator standing this week totaled a net position of -33,305 contracts in the data reported through Tuesday. This was a weekly lowering of -5,787 contracts from the previous week which had a total of -27,518 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 0.0 percent. The commercials are Bullish-Extreme with a score of 100.0 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 91.1 percent.

WHEAT Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	28.3	42.1	10.2
– Percent of Open Interest Shorts:	39.0	30.2	11.4
– Net Position:	-33,305	37,024	-3,719
– Gross Longs:	87,807	130,938	31,815
– Gross Shorts:	121,112	93,914	35,534
– Long to Short Ratio:	0.7 to 1	1.4 to 1	0.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	0.0	100.0	91.1
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-31.2	33.5	17.0

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.

30 Nov

Inflation: how financial speculation is making the global food price crisis worse

By Sophie van Huellen, University of Manchester

UK households, like those in many other countries, are struggling to make ends meet. More than half of households have only £2.66 per week left after paying for bills and essentials, according to figures from the supermarket chain Asda.

The extreme spikes in the cost of energy and food that we have seen this year are mostly to blame for this shift. Basic grocery prices have increased by 17% on average from last year, according to the Office for National Statistics, while some products such as pasta have increased by as much as 60%. This is because the cost of staple food crops, such as wheat, have increased by more than 30% since the beginning of 2021.

The drivers of these soaring prices are multiple: Russia’s war on Ukraine (a major wheat exporter), the effect of extreme weather on harvests, and pandemic-era supply chain bottlenecks that are still being felt due to ongoing lockdowns, labour shortages and loss of capacity by producers.

But these supply factors do not entirely explain recent price movements. Bumper grain harvests have been reported by China in 2021 and the US in 2022, and the UN’s Food and Agriculture Organization (FAO) predicts a “comfortable supply situation” for grain in 2022-23. This calls into question whether soaring food prices can be attributed solely to supply shortages.

When the world last experienced a major food crisis in 2008, financial speculation with food-based derivatives was seen as a contributing factor. Indeed, my research on that food crisis suggests the world is once again likely to be experiencing a food price crisis rather than a food supply crisis.

The role of traders

While soaring food prices threaten food security globally, large food trading firms are profiting. These companies bet on the direction of food prices by storing or trading substantial amounts of goods – making big financial gains as a result.

But it’s not just physical goods that are traded. Financial markets also see producers and consumers, alongside banks, brokers and investors, trading in commodities such as food. Sometimes called paper trading because it involves the use of “futures contracts” rather than actual crops, this activity happens on commodity exchanges around the world.

Traders can buy (called “being long”) or sell (“short”) on these exchanges, and most contracts end before the delivery date so a trader doesn’t have to own or receive the goods to benefit – or not – from price changes. Similarly, traders only have to place a deposit with an exchange, from which gains and losses are added or taken. They do not have to put down the full value of the crop they are buying or selling via the commodity exchange unless they take delivery of the physical item at the end of the contract.

The role of speculators

While this can of course promote speculation, commodity exchanges also help producers, consumers and traders in physical food commodities to manage their risk. For instance, a farmer might take a short position (essentially betting that prices will fall) on the price of wheat via a contract that ends (or matures) close to the time of harvest. If prices fall while the crop grows, the contract gains in value and makes up for the farmer’s losses if the actual crops are worth less. It’s like an insurance policy that enables the farmer to plan ahead at the time of planting the crop.

For risk management to work, however, the physical price of the commodity must track the futures price. To guarantee this close relationship, the price of a physical contract is based on the price of a specific futures contract. For example, the Brent Crude futures contract traded on the Intercontinental Exchange is a globally accepted benchmark for a certain type of oil. Global food prices are similarly determined on financial futures markets.

The use of benchmarks is often justified by the claim that financial markets are good at “price discovery” – determining the current value of a product. The “efficient market paradigm” states that all information about market fundamentals – that is, physical demand and supply conditions – is reflected in the futures price.

Ignoring the fundamentals

For this to hold, trading activity must be based on this fundamental information alone. However, my research shows that financial traders use a variety of trading strategies that are not based on reading market fundamentals. This has important implications for food prices.

Take “index traders”, for example. These are typically large investors such as pension or insurance funds that invest in indices that track certain types of assets. They use commodity derivatives for diversification, to balance out the effects of inflation on other parts of their investment portfolios. They are also known as “noise traders” because their trading decisions support price increases that are completely unrelated to actual demand and supply.

On the other hand, hedge funds and investment banks tend to make trading decisions based on a mix of both market fundamentals and statistical charts or graphs showing historical price trends. This is known as “positive feedback trading” because it replicates and amplifies real price trends.

Research I conducted in 2020 shows that positive feedback and noise traders can have a substantial and prolonged impact on commodity futures prices. This means high food prices do not always signal a food shortage. An increase in speculative activity on food commodity markets since 2020 suggests that financial speculation could well have contributed to recent price highs.

This indicates that the current food crisis is a price crisis, rather than a supply crisis. But this does not mean that there are no food shortages.

High prices have severe consequences for food import-dependent countries that don’t have the facilities or money to secure supplies for their own people. Stockpiling by larger countries in anticipation of rising food prices, with the intent of securing access to food for their own citizens, further squeezes the physical supply of food. This is how a food price crisis can quickly turn into a food supply crisis.

And as the world saw when prices spiked in 2007-2008, when speculation creates a disconnect between real food supply and demand conditions, it can have devastating consequences for food security globally.

About the Author:

Sophie van Huellen, Lecturer in Development Economics, University of Manchester

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Financial News Soft Commodities

20 Nov

Soft Commodities Speculators drop their Coffee bets to 158-week low

By InvestMacro

Here are the latest charts and statistics for the Commitment of Traders (COT) reports data published by the Commodities Futures Trading Commission (CFTC).

The latest COT data is updated through Tuesday November 15th and shows a quick view of how large traders (for-profit speculators and commercial entities) were positioned in the futures markets.

Sugar & Cocoa top Weekly Speculator Changes

The COT soft commodities speculator bets were lower overall this week as four out of the eleven soft commodities markets we cover had higher positioning this week while the other seven markets had decreases in contracts.

Leading the gains for soft commodities markets was Sugar (66,012 contracts) with Cocoa (13,895 contracts), Soybean Oil (5,282 contracts) and Lean Hogs (897 contracts) also showing positive weeks.

The softs market leading the declines in speculator bets this week was Corn (-48,646 contracts) with Soybean Meal (-16,485 contracts), Soybeans (-11,005 contracts), Live Cattle (-9,513 contracts), Coffee (-9,471 contracts), Wheat (-5,267 contracts) and Cotton (-364 contracts) also registering lower bets on the week.

A highlight of this week’s COT soft commodities data is the continued decline of the Coffee futures positioning that have hit their first net bearish positions since July of 2020. Large speculators dropped their weekly bets for Coffee for the seventh straight week this week and for the tenth time out of the past eleven weeks. Coffee bets have now fallen by a total of -58,834 contracts over just these past seven weeks and are in an overall bearish position for the second straight week.

The decline in spec bets has happened very rapidly as bullish positions were as high as +40,000 contracts on November 1st while the position leveled at a total net position of -14,154 contracts through Tuesday. This week’s net position marks the lowest speculator standing since November 5th of 2019, a span of 158 weeks.

Coffee prices have been on a steep drop as well with futures prices falling by over -35 percent since late-August. Helping put a dent in prices is an improved outlook for production out of Brazil that is seen as positive for the coffee harvest.

Data Snapshot of Commodity Market Traders | Columns Legend

Nov-15-2022	OI	OI-Index	Spec-Net	Spec-Index	Com-Net	COM-Index	Smalls-Net	Smalls-Index
WTI Crude	1,469,437	3	278,267	18	-307,395	81	29,128	48
Gold	495,171	17	126,269	25	-134,308	78	8,039	0
Silver	141,623	14	17,607	34	-29,424	67	11,817	27
Copper	168,962	9	9,821	44	-13,583	56	3,762	47
Palladium	8,793	14	-1,072	17	1,231	81	-159	32
Platinum	63,391	27	22,544	39	-27,037	62	4,493	28
Natural Gas	978,425	6	-152,114	33	120,830	69	31,284	54
Brent	139,080	4	-25,194	69	20,782	28	4,412	69
Heating Oil	275,254	26	25,660	80	-46,933	21	21,273	72
Soybeans	616,094	9	76,804	37	-49,046	72	-27,758	24
Corn	1,421,555	22	252,908	62	-211,862	42	-41,046	19
Coffee	191,743	6	-14,154	0	11,840	100	2,314	32
Sugar	832,522	26	156,194	59	-201,779	39	45,585	64
Wheat	350,091	27	-22,481	0	29,310	100	-6,829	75

Soybean Meal & Soybean Oil lead the Strength Scores

Strength Scores (a normalized measure of Speculator positions over a 3-Year range, from 0 to 100 where above 80 is extreme bullish and below 20 is extreme bearish) showed that Soybean Meal (85.8 percent) continues to lead the soft commodity markets and is in a bullish extreme position with a score above 80 percent. Soybean Oil (75.3 percent) comes in as the next highest soft commodity markets in strength scores followed by Corn (62.3 percent) and Sugar (59.4 percent).

On the downside, Coffee (0.0 percent) joins Wheat (0.0 percent) at the lowest strength levels currently and are both in bearish extreme positions (below 20 percent).

Strength Statistics:
Corn (62.3 percent) vs Corn previous week (68.6 percent)
Sugar (59.4 percent) vs Sugar previous week (41.7 percent)
Coffee (0.0 percent) vs Coffee previous week (11.2 percent)
Soybeans (37.0 percent) vs Soybeans previous week (40.3 percent)
Soybean Oil (75.3 percent) vs Soybean Oil previous week (71.7 percent)
Soybean Meal (85.8 percent) vs Soybean Meal previous week (95.0 percent)
Live Cattle (39.5 percent) vs Live Cattle previous week (51.4 percent)
Lean Hogs (52.2 percent) vs Lean Hogs previous week (51.3 percent)
Cotton (24.2 percent) vs Cotton previous week (24.4 percent)
Cocoa (42.4 percent) vs Cocoa previous week (28.7 percent)
Wheat (0.0 percent) vs Wheat previous week (6.2 percent)

Strength Trends led by Soybean Oil, Sugar & Cocoa

Strength Score Trends (or move index, calculates the 6-week changes in strength scores) show that Soybean Oil (31.1 percent) leads the past six weeks trends for soft commodity markets this week. Sugar (29.1 percent), Cocoa (25.4 percent) and Lean Hogs (19.8 percent) fill out the next top movers in the latest trends data.

Coffee (-66.3 percent) leads the downside trend scores currently while the next market with lower trend scores was Wheat (-33.2 percent) followed by Cotton (-13.0 percent).

Strength Trend Statistics:
Corn (-6.7 percent) vs Corn previous week (0.6 percent)
Sugar (29.1 percent) vs Sugar previous week (11.1 percent)
Coffee (-66.3 percent) vs Coffee previous week (-58.1 percent)
Soybeans (3.1 percent) vs Soybeans previous week (2.4 percent)
Soybean Oil (31.1 percent) vs Soybean Oil previous week (31.0 percent)
Soybean Meal (-0.7 percent) vs Soybean Meal previous week (3.4 percent)
Live Cattle (6.0 percent) vs Live Cattle previous week (-4.4 percent)
Lean Hogs (19.8 percent) vs Lean Hogs previous week (1.3 percent)
Cotton (-13.0 percent) vs Cotton previous week (-16.2 percent)
Cocoa (25.4 percent) vs Cocoa previous week (21.5 percent)
Wheat (-33.2 percent) vs Wheat previous week (-23.6 percent)