According to the latest COT report, over the week ending January 24 the money managers' longs in the oil market (NYMEX) hit another record. During the reporting period their net long position rose by 21,429 (+6.1%) contracts, amounting to 370,939 contracts.
From November 30, 2016 (the date of OPEC summit, at which it was decided to reduce oil production), the net long position of the money managers in this market grew by 181,853 contracts, rising almost twice.
Over the last week, the market liquidity almost did not change, remaining at the level of multi-year highs.
Comparing the liquidity dynamics of the oil, precious metals and agricultural commodities markets, it should be noted that only the oil market was demonstrating a stable liquidity inflow during the last six months.
Over the past two months, the money managers were actively buying oil, while the average price remained at the same level. The liquidity from other markets flows into the oil market. This will most likely result in the strengthening of the bullish potential of this market.
Over the week the money managers closed 7,124 previously bought and 6,867 previously sold gold contracts. As a result, the money managers' net position on gold almost did not change, however, their presence on the market declined.
The market liquidity slightly increased, but the speed of the capital inflow declined.
In my opinion, in terms of money managers' behavior and liquidity dynamics behavior, the sideways trend is likely to develop in the gold market in the nearest future. Perhaps, the next driver of the market will be the outcome of the Federal Open Market Committee meeting on Wednesday.
The money managers were buying silver for the fourth consecutive week. Their net long position rose by 4,357 (+8.6%) contracts, reaching to 55,109 contracts.
The current ratio between the silver contracts, sold and bought by the money manager, is 22.3%, which is already close to the level of the year-and-a-half minimum.
The open interest in this market grew by 2.83% reaching 195,310 lots.
In my opinion, in the context of the money managers' behavior, the growth potential of the silver market is higher than that of the gold market.
In just one week the money managers bought 72,283 corn contract! As a result of such aggressive actions, their current net position became long, amounting to 20,898 contracts.
The market liquidity has also increased and is already approaching the average level over the past year and a half.
Over the past month, the money managers bought 134,546 corn contracts, which is objectively a big number, based on historical activity of the money managers in this market. These actions at least mean the market incapacity to significantly reduce.
The money managers' actions in wheat market was not active. Over the week their net short position rose only by 3,682 (+4.3%) contracts, amounting to 603,848 sold wheat contracts.
The market liquidity almost did not change, remaining close to the two-year high.
In the context of the money managers' actions the wheat market remained neutral. At that, the tendency of the money managers to systematically reduce their net short position, observed over the past three months, indicates that the market has achieved a strong support level.
For the week ending January 24, the money managers bought 44,888 soybean contracts, increasing their net long position to 176,410 contracts, which is close to the two-year maximum.
The relative size of the money managers' position (the ratio between the net position and the open interest) on January 24 reached a record value at the level of 19.9%.
Starting from January 25 and till the present moment, the soybean futures price has already dropped by 3% and continues to fall, that probably means that the price rally amid floods in Argentina has stopped. As I have already shown, the money managers hold a relatively big number of purchased soybean contracts, that now should be at least partially closed. Against this background, I believe that a reduction in the soybean futures price will continue up to the level of $10.
So, amid the neutral oil price movement, the money managers continue to actively buy oil. While the liquidity from other markets flows into the oil market. All this indicates an increase in bullish market potential.
In the context of the money managers' behavior, the silver is now more positive than the gold market.
The money managers aggressively buy corn. Also, liquidity returns to this market. The corn market is under the pressure from the soybean market, but I don't think the corn futures price will fall below $3.50 in the near term.
The money managers do not take active actions in wheat. This market remains neutral.
The soybean market decline, that is currently observed, is partly caused by the money managers' need to eliminate the excess amount of the bought contracts. The continued reduction of the soybean price is likely, unless heavy rainfall resume in Argentina in the nearest future.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.