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Traders Are Massively Short These Commodities

Jul. 14, 2017 2:52 AM ETBAL, EWJ, FXC, FXE, GLD, JO, NIB, PPLT, SPY, USO, UUP, VXX17 Comments
Movement Capital profile picture
Movement Capital


  • Traders are extremely short platinum, cocoa, and coffee futures. Cotton and WTI crude have been recent examples of how crowded positioning can violently unwind.
  • EUR/USD and MXN/USD are very crowded on the long side. Speculators were caught off guard with their CAD/USD shorts.
  • Spec positioning in the S&P is long, but not extremely so. Traders have steadily grown less short of VIX futures.

Note: My approach for analyzing CoT data to reveal how different types of traders are positioned in the futures markets is outlined here. If you missed it, give the article a read to see the method behind my analysis. All data and images in this article come from my website.

This article outlines how traders are positioned and how that positioning has recently changed. I break down the updates by asset class, so let's get started.


Traders haven't been this net short cocoa (NIB) futures in five years.

Crowded short positioning, which I define as a 5-year percentile of net positioning as a % of OI < 10%, isn't simply a reason to go long. Traders who are short cocoa have zero incentive to exit their positions as long as the trend keeps going their way. If the price of cocoa were to reverse, then that might be a reason for concern. This is because you would start seeing a large number of people heading for the exits (to close their shorts) at the same time. I call this a "fire in the theater" situation.

Similar positioning can be seen in coffee (JO) futures. Coffee producers have rarely had so little of their future production hedged. This can be interpreted as a bullish signal - they're anticipating higher prices and don't want to "lock in" currently low prices.

Cotton (BAL) recently provided a good example of what can go wrong when speculators bite off more than they can chew. Back in March they established a massive long position. The commodity has now fallen ~13%, and longs liquidating their positions has likely exacerbated the selling.

Here's how traders are positioned in gold (GLD) futures.

Platinum (PPLT) miners are hedging relatively little of their future production.

WTI crude oil (USO

This article was written by

Movement Capital profile picture
Eversight Wealth is an independent flat fee investment advisor offering financial planning and investment management services. We help investors build low-cost diversified portfolios, create comprehensive financial plans, and save money with a flat annual fee. Formerly Movement Capital.

Analyst’s 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.

The author does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked in this article or incorporated herein. This article is provided for guidance and information purposes only. Investments involve risk are not guaranteed. This article is not intended to provide investment, tax, or legal advice. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

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Comments (17)

In today's politically correct society might it be better to change "fire in the theater" situation, to a "school shooting" situation?
14 Jul. 2017
Great information!

Since COT data is aggregated across many years and price depend on the calculation time period, How do you calculate prices used in these charts. I am trying to calculate the same information for Natural gas basis markets and hence the question.

Movement Capital profile picture
Pricing data is always for the front month contract and rolling is based on OI
Would you short the CAD at this point? Seems that the net short position has unwound significantly.
14 Jul. 2017
Is there an article that you have published that covers off ways to interpret/read these graphs?


Movement Capital profile picture
Yep, check out the "How To" page on my site: http://bit.ly/2mxmmN1

My site is free and SA is the sole source of my weekly recaps
@ author, good informative article, thank you.
Movement Capital profile picture
Exile of the Mainstream profile picture
To the author,

Are you long or short any of these?

I've been following you for a while, and never see you take a position...Just wonder how you use this data yourself, given it's so well put together....Are you waiting or looking for a certain level before doing anything? I mean Cocoa and Coffee look to be at extreme levels...What don't you like about them for example?
Movement Capital profile picture
Positioning is only one piece of the puzzle. Traders need to also incorporate technicals, fundamentals, term structure, seasonality, volatility, etc.

I've got a website on seasonality and term structure, and will soon be covering the other topics. So hopefully my sites will give traders more of the "full picture" they need
TaTrade profile picture

Can you expand on the platinum cot situation in regards to the low hedging of future production and what that means for prices going forward

Movement Capital profile picture
Regarding platinum, hedgers are very long and speculators are very short. This means that platinum miners are relatively "unhedged" compared to the past five years and you could infer from this that they think prices will go up.

Speculators are typically trend followers, and since platinum has gone down in price they're biased to the short side. I don't know where prices will go, but positioning certainly lends itself to a bullish bias
ved-dev profile picture
Is it possible to estimate price targets should a short squeeze occur in those above mentioned comms using historical data from previous one sided positionings?
Movement Capital profile picture
Honestly, you could but it would be like throwing darts. In my opinion, best to simply recognize where positioning is crowded and prepare accordingly
ved-dev profile picture
Great work as always. thanks
Freeon profile picture
This information is helpful

thank you
Movement Capital profile picture
Thanks! I really appreciate the positive feedback!
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