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Commodities are seeing a mixed and somewhat lacklustre session Tuesday, lacking conviction despite some weakness in the dollar following comments from the New York Fed President, saying an exit from the US Federals Reserve ‘loose’ monetary policy could be years away.

Coupled with some stabilisation in the Eurozone peripheries, this is leading to decent gains in the euro-dollar; again a move the commodity markets are all but dismissing today. That said, ongoing fears surrounding possible economic tightening in China are keeping the pressure up for the most part, particularly after South Korea raised their interest rates overnight.

In this backdrop, the weekly commitment of traders report from the Commodity Futures Trading Commission (CFTC), released yesterday because of the Veterans Day holiday last week, has been taking a lot of focus with regards to the shifting speculative positions across the commodity markets.

Looking first at the precious metals complex, where speculative demand has been a key driver of price in recent weeks, the latest CFTC report shows net speculative long positions for Comex gold futures, increased by around 16,000 contracts in the week to 246,179. This came predominantly from a 15,200 contract rise in speculative long positions themselves, combined with around 600 short contracts being covered in the week.

Although this took long positions to a 4-week high at 298,005, as a percentage of open interest (which rose by 32,383 contracts to 650,764), the position actually stagnated at 45.7%, as did the net position, holding at around 37% (the short position fell from 8.5% to 7.9% in the week).

Comex silver futures saw almost the exact reverse of this however, with the net long position falling by 7,200 contracts in the week to a 3-month low at 32,583. Again this came about as speculative long positions dropped 6,621 contracts in the week to 46,004, while around 588 additional short positions were opened, taking the total to 13,421.

Unlike gold however, the moves in silver were mirrored as a percentage of open interest, with the net position dropping from 25% to 20.8% in the week, while long positions fell from 33.2% to 29.4% (short positions stagnated at just over 8%).

Both of these figures are the lowest point since February this year, and could be signalling a fundamental shift in speculative attitudes towards silver, and perhaps more broadly, the precious complex.

Unlike the precious complex, which is itself trading mixed today, base metals are decidedly more negative as fears surrounding fiscal tightening in China continue to dominate price action.

As far as the CFTC report goes, the week ending November 9 saw a sharp push to the long side in Comex copper futures; net long positions increasing by almost 5,000 contracts to 30,089 – the highest level since March 2005. That said, it is worth noting that this reporting week does not encompass the sharp fall seen in copper prices in the last few sessions, and so it is highly likely that much of this long position has already been liquidated.

The move in copper came from a relatively equal 3,000 contract addition to speculative longs (taking the total to 55,566), and a 2,000 contract decrease to the short side, seeing short positions fall to a 2-month low of 25,477.

Nymex light sweet crude has fallen back to the lowest point for the last couple of weeks today, trading below $84/bbl as a weaker dollar and Asian fiscal tightening fears continue to weigh. As with many of the other commodities, crude is lacking any real conviction today, and the weekly American Petroleum Institute (API) inventory report published later, may offer traders something to grab hold of. Estimates for the weekly inventory numbers, for which tomorrow’s US Department of Energy (DoE) data is really seen as the benchmark, expect crude stocks to fall by around 1.5 million barrels (mbls), with gasoline stocks seeing a similar decries of 1mbls, and with middle distillates seen declining around 1.5mbls.

The CFTC data showed net speculative long positions in Nymex crude futures saw a 14,000 contract increase in the week ending November 9, bringing the position to the highest point ever recorded at 144,107.

As with copper this does not take account of the sharp pull back in recent session, and it may already be the case that much of this long position has now been liquidated. The data showed long positions increased by around 11,000 contracts, again to the highest point on record at 347,488, while short positions fell by around 3,200 contracts to 203,381. Despite these sharp gains in the net and long positions however, as a percentage of open interest (which increased by 52,871 contracts to 1,486,195), they both stagnated at around 9% and 23% respectively, indicating much of the increase can be attributed to additional interest in the crude market, rather than a significant bullish shift in speculation.

Unlike most other commodities, the agricultural sector is one of the few today actually taking direction from fundamental news, with wheat futures trading lower after the US Department of Agriculture (USDA) weekly crop report showed that although the winter wheat crop is still relatively low, it has improved on last weeks outlook, following on from long awaited rainfall in key strategic areas last week.

This has eased some of the speculation of supply weakness, all be it to a very mild degree, and accordingly has allowed wheat to pull back a little (as have corn and other related commodities, in sympathy).

Interestingly, the latest CFTC report showed that speculation in the wheat market last week actually fell, and so couldn’t account for the strong price gains seen in recent session (including gains seen the week ending November 9).

Sugar and cotton also saw a similar fall in speculative net long positions, again leading to the conclusion that much of the gains in the agricultural sector are coming from physical and fundamental drivers.

Disclosure: No position

Source: Net Long Positions in Comex Gold Futures Hit Four Week High