Gold Long Extends Further; Ag Selling Picking Up Speed

Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.

The below summary highlights futures positions and changes made by hedge funds across commodities and forex up until last Tuesday, May 18. A relatively quiet week ahead of Wednesday’s crypto collapse and FOMC minutes saw stocks, bonds and the dollar trade softer, while the biggest changes were seen across the commodities sector where the month long synchronized rally increasingly showed signs of running out of steam.


The Bloomberg Commodity index dropped 0.7% on the week as an emerging correction across agriculture commodities, led by soybeans and corn off-set gains in energy and precious metals. In response to these developments, hedge funds cut bullish commodity bets for a second week with the total net long across 24 futures contracts falling by 4% to a four-week low at 2.4 million lots. Broad selling across all sectors except precious metals was led by corn (25.3k lots), soybeans (25.2k) sugar (20.8k) and crude oil (22.2k) with most of the buying concentrated in gold (11.3k) and natural gas (12.1k).

Commodities Chart


Speculators cut bullish oil bets for a second week with the combined net long in Brent and WTI falling by 22.2k lots to 634k lots to a six-week low. In Brent, the reduction was driven by increased short selling with the gross short rising to the highest since November. The short-term outlook has once again deteriorated with the prospect for rising Iran production and OPEC+ production increases hitting a market still lacking the synchronized global recovery in in demand. Despite a strong recovery in fuel demand across the U.S. and Europe, continued Covid outbreaks in Asia will continue to impact the short-term outlook and not least the recovery in jet fuel demand, which looks set be very slow with restrictions and lack of interest flying intercontinental not going away anytime soon.

Fuel products continued to be bought with the net longs in gas (143k lots) and NY Harbor ULSD (24.5) both reaching the highest levels in 30 months. Natural gas meanwhile saw fresh buying as the contract made another and so far unsuccessful attempt to gain a foothold above $3.


Gold’s new found momentum helped drive a third consecutive week of fund buying, which resulted in the net long rising 12% to 107k lots, a 16-week high. Gold has not managed to put together a three week buying spree of this magnitude since last June, and it highlights the continued improvement in the technical outlook during a period of stable Treasury yields, a weaker dollar, and not least heightened volatility across crypto currencies. The improvement in the technical outlook was further confirmed this past week by the move above the 200-day moving average, last at $1845, and the breaching of the downtrend from the $2075 record high last August.

Silver gave back some its recently earned relative strength against gold in response to continued profit taking hitting the up some of the up until recently highflying industrial metals. The net long was cut by 3% to 46.5k lots while a second week of net copper selling reduced the net long there by 15% to 51.9k lots.


Emerging profit taking helped drive a 9% reduction to 963k lots in the net long held in ten major grains and soft commodities. Most noticeable was the accelerated net selling across the three key crops where 25k lots reductions in both corn and soybeans triggered a reduction in the net long to a December low at 458k lots. The bullish soybean momentum has eased with planting in the U.S. progressing at speed while wheat’s two-week decline of more than 11% has been the result of heavy rain in Kansas, the top growing state raising the prospect for record yields. Corn meanwhile managed to hold steady supported by tight supply with focus on Chinese buying, currently running at levels never seen before, and increased demand from the renewable fuel industry.



Mixed flows in the week to May 18 resulted in an unchanged dollar short position against ten IMM currency futures and the Dollar Index. Buying of EUR (5.9k lots) and CAD (7.5k) being offset by selling of JPY (9.2k) and GBP (3.3k).

Forex Chart

From a ten-year high at $36.8 billion on January 19, the dollar short against the mentioned futures contracts dropped to a $5.2 billion low five weeks ago before short-sellers re-emerged to take it back to the current $15.5 billion.


What is the Commitments of Traders report?

The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class.

Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and other
Financials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and other
Forex: A broad breakdown between commercial and non-commercial (speculators)

The reasons why we focus primarily on the behavior of the highlighted groups are:

  • They are likely to have tight stops and no underlying exposure that is being hedged
  • This makes them most reactive to changes in fundamental or technical price developments
  • It provides views about major trends but also helps to decipher when a reversal is looming

Ole Hansen, Head of Commodity Strategy at Saxo Bank.

This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of Saxo Bank Group through RSS feeds on FX Empire

Organic Soybean Processors of America Takes On India in Antidumping Case

The Jacobsen is reporting, a new antidumping and countervailing duty petition was filed on March 31 by the Organic Soybean Processors of America; and several organic soybean crushers. The Petition includes less than fair value antidumping language and unfair subsidies allegations against India. The Department of Commerce and the International Trade Commission will conduct the investigations. Within the next 45 days, the International Trade Commission will determine if there is a reasonable indication that the imports injure the U.S. industry. If the ITC finds that this standard is upheld, then the cases will move to the Department of Commerce, which will calculate the preliminary antidumping duty margins.

The Time Line

The Department of Commerce preliminary determinations are currently scheduled for June 24 for unfair subsidies and September 7 for antidumping, which are the dates when importers will be required to deposit the calculated duties upon the products’ entry into the U.S. market. There are strict deadlines for this procedure. According to The Jacobsen sources, several organic soybean exporters were contacted by the U.S. International Trade Commission on 3/31/21.

The complaint goes on to say that “Indian producers were able to offer these prices and capture this market share as a result of dumping and a series of subsidy programs that the Department, the Commission, and the World Trade Organization repeatedly have found to violate U.S. trade laws and multilateral trade agreements.”

The complaint discusses how organic soybean meal is used in the United States and the premiums that it can garner relatively to conventional soybean meal. Additionally, the complaint discussed the total actual demand for OSBM in the United States increased by a CAGR of 7% per year since 2014. The industry can crush approximately 550K metric tons of organic soybean meal per year. The Petitioner has alleged antidumping margins of 154.12% ad valorem and unfair subsidies above de minimis.

What is the Key Subject?

The U.S. International Trade Commission says that they consider if “there has been significant price underselling by the imported merchandise as compared with the price of domestic like products of the United States,” and also whether the effect of imports “otherwise depresses prices to a significant degree or prevents price increases, which otherwise would have occurred, to a significant degree.” The write-up says that U.S. prices of organic soybean meal have been consistently falling in a period when the demand has been increasing. The complainers have lost significant revenue because of the imports over the 2017-2020 period. The complaint says that 376K short tons of organic soybean meal sales were lost due to the imports.

How to Hedge Organic Corn and Organic Soybeans

The Chicago Board of Trade started offering corn contracts with formal rules in 1865, the same year The Jacobsen began publishing.

Beginning in 2021, for the first time, commercial entities that wanted to hedge or trade organic corn or organic soybeans will have that opportunity using The Jacobsen data via

Purchasing Calls and Puts will offer call (call spreads) and put (put spreads) options on organic corn and organic soybeans using The Jacobsen data to settle each trade. This process will allow consumers to hedge their exposure with triple-A rated insurance companies as their counterparties.

This first of its kind product will finally enable organic grain traders to trade derivatives using the most trusted publishing company in the business. The products are available now, allowing you to trade immediately using our trusted data. The types of options that are available are both call options and put options.

To hedge, you can either buy a call option on organic corn, which protects you if prices rise. Alternatively, you can buy a put option to protect you against organic corn (soybean) prices falling. You will pay a premium for the right to either buy or sell organic corn (soybeans) in both cases. The initial product offered by Stable price is a call spread or put spread, which means that the protection value is capped.

For example, you can purchase an $8-12 call spread on organic corn, capturing any movement between $8-$12 per bushel. Above $12, you will not be protected.

Average Price and European Options will offer both average price options and European style options. Average price options measure the average price calculated during the month versus the strike price, while European style options measure the strike price versus the last trading day of the month. If you are a Premium client of The Jacobsen we will calculate the averages for you. You will also see historical averages that can help you determine the most accurate strike price to use when you purchase calls and puts.

Triple-A Credit

If you trade options with, you will face a counterpart backed by Triple rated insurance companies, including AON. This product provides the peace of mind the industry has been waiting for.

Additionally, companies with exposure to fats, oils, hides, and hemp can hedge their exposure using similar concepts. The Jacobsen is one of the few companies with IOSCO certification and is considered the most trusted commodity price discovery source. If you are looking for more information about how you can hedge your organic corn or organic soybean exposure, please contact David Becker at

Organic Soybean Prices Forecast to Hit 5-Year Highs

Historically, during the fall the seasonal tendency is for Indian organic soybean prices to decline into the middle of the Q4. During the balance of the fall, prices tend to find their seasonal bottom and then begin to rise following the harvest. Exporters tend to talk up prices by discussing issues related to the weather and the decline in production for the ongoing harvest.

In 2020, the themes are the same, but the price action is different. Soybean prices on the NCDEX have surged, rising to the 571 Rupee per metric ton which is the highest that NCDEX soybeans have been in October during the last 5-years. While the spread between Indian organic soybeans and Indian conventional soybeans will vary based on supply and demand and the region they are planted, prices for Indian organic soybeans have risen to $660 per metric ton FOB India. While meal prices continue to lag, it’s unlikely that they will remain subdued in the face of rising Indian soybean prices.

The Rupee has also strengthened recently which can also help buoy prices. During 2020, the Rupee has declined approximately 3% versus the US dollar but has strengthened approximately 4.5% since hitting a low in April of 2020 during the height of the COVID-19 scare. Since strengthening during the summer, the Rupee has remained in a relatively tight range between 73-74 per US dollar.

The Federal Reserve has used plenty of its ammunition to stabilize the US economy, and further economic weakness would put downward pressure on US yields, allowing the dollar to slip further. A strengthening Rupee will put additional upward pressure on organic soybean prices.

The rise in Indian soybean prices and in turn Indian organic soybean prices have occurred as projections for the new-crop in India have changed from 12-million metric tons of production down to 10-million metric tons of production. Price action is telling us that production projections might still be too high. Additionally, there is also an issue with containers making their way back to Indian which has lifted shipment costs to $120 per metric ton for both the east coast and the west coast.

During the past 4-years, the rally from the seasonal low in October to the seasonal high in either Q1 or Q2 averaged 19%. An average rally from 571 per metric ton would put non-GMO Indian soybeans near 671 per metric ton. This potentially could push Organic soybeans to $750 per metric ton and with shipping would place prices in Baltimore at $870 per metric ton or $24 per bushel for Indian soybeans.

With US domestic organic soybeans already priced close to $20 per bushel, this cycle would only generate further upside. During the U.S. harvest prices could be capped but once domestic soybeans are gone, the focus will turn to India where the majority of organic soybeans are imported. Nearly 70% of the organic soybean consumed in the U.S. is imported. While this large increase and outcome are unlikely to completely come to fruition The Jacobsen believes there will be further upward pressure on prices and is increasing its target for organic soybeans up to $23 per bushel for the Q1 of 2021.

Organic Corn Prices Remain Depressed Despite Decline in Organic Cracked Corn Imports

Organic corn prices remain depressed despite a decline in organic cracked corn imports. Organic cracked corn imports increased steadily during the ramp-up in organic poultry demand in the United States during the 2017/2018 marketing season but have tailed off during the 2019/2020 season.

There was a dearth of organic cracked corn imports in September 2020 which was in line with the Jacobsens expectations. Despite the lack of organic cracked corn, organic corn prices have remained depressed. The Jacobsen estimates that no organic cracked corn imports arrived in September in the United States, which compares to approximately 1,600 tons which appeared in September of 2019. Historically, September has experienced robust volumes of organic cracked corn imports. For example, in September of 2018, approximately 22K tons of organic cracked corn was imported into the US.

While organic cracked corn remains a bone of contention, especially for US domestic organic farmers, the volume has declined in the past marketing year. The Jacobsen estimates that organic cracked corn imports for the 2019/2020 season were down 27% year over year, compared to the 2018/2019 marketing year.

The decline in cracked corn imports is likely a function of the drop in organic whole corn prices and the robust increase in organic whole corn available in the US. With the harvest season upon us, organic corn prices will continue to face pressure unless demand accelerates quickly or, organic cracked corn and whole corn imports moderate throughout the 2020/2021 season. The downturn in organic corn prices has not impacted the strong demand and upward price movements of organic soybeans.

The 2019/2020 season was littered with low test weight organic corn, that was sold at a discount. The Jacobsen does not expect the 2020/2021 season to see this same phenomenon, which could help buoy organic corn prices if demand remains robust and imports begin to decline.

Organic Soybean Prices Continue to Experience Tailwinds

Organic soybean meal prices continue to edge higher and are currently quoted at 630 per metric ton FOB India. There are concerns amongst merchandisers that are helping to keep prices buoyed. First, the weather in India has been wetter than expected and has likely damaged some of the crops. The Jacobsen had expected the total production of soybeans in India for the 2020/2021 season to produce close to 11-million metric tons per year, just a 1-month ago.

All of the soybeans produced in India are non-GMO with a portion that is organic. The Jacobsen is now hearing that as much as 30% of the crop could be damaged which could take the total production down to 7.7 million metric tons per year. It’s hard to believe that the volume of organic soybeans harvested could be less than last years 8.5 million metric ton that was produced in 2019/2020. A more realistic target would likely be 9-million metric tons of Indian soybean production.

Second, merchandisers are seeing that the new NOP crackdown is beginning to impact the deliveries of organic soybean meal that is brought into the United States. Merchandisers have said that organic soybean meal from Turkey has had issues which are making it more difficult to find organic soybeans and organic soybean meal.

Third, there appears to be an issue with containers in India. While there are plenty of containers that are being shipped from India with organic soybean meal to the US, there are not a lot of containers that are getting shipped back. This is creating a container shortage in India, which will likely have an impact on the organic soybeans and organic soybean meal that is exported to the United States that is expected to arrive in October and November. Merchandisers believe there will be a shortage of soybean meal that arrives in this month which is started to push the price higher.

Organic Broiler Sales Continue to Climb

The issues with organic soybean meal are coming as broiler sales as big-box stores and supermarkets continue to rise. According to The Jacobsen, organic broiler sales increased 15% year over year in August compared to the same period in 2019. For the 6-months ending August 31, since the pandemic has shut-down restaurants across the US, organic broilers sales have increased a robust 28% year over year according to The Jacobsen.

Organic Corn Prices Continue To Slide Despite Rising Demand from Retail Consumers for Groceries

Organic corn prices remain heavy, and the coming harvest will likely further weigh on organic corn prices. The potential damage to crops in Iowa will likely be offset by a bumper crop in Minnesota according to Merchandisers. Organic corn prices are hovering near the $6.50 level, with bids closer to $6 picked up at the farm.

There is a plethora of organic corn that is still in bins ahead of the new-crop season. The Jacobsen currently sees the organic corn carryover at 3.3 million bushels with less than 2-months before the completion of the old-crop season. There have been few contracts for new-crop reported recently and for prices to retrace back to the $7-handle could be a challenge.

Organic Animal Proteins Take a Large Piece of the Pie

The decline in organic corn prices comes despite rising demand for organic animal proteins (organic chicken, organic eggs, organic dairy) sold at supermarkets, and big-box stores are has grabbed a larger piece of the pie according to The Jacobsen.

Despite this upward trend, there has been little upward movement driving organic prices.  While food services continue to suffer and the supply chain remains fragmented, supermarkets and big-box stores are thriving.

In its latest financial report, Target reported that its private-label grocery brand, Good & Gather, hit $1 billion in sales after launching in September of 2019. Same-store sales surged year over year rising a robust 20%. At Walmart, E-commerce business jumped 97% year over year, boosted by people ordering groceries online to pick up at store parking lots. Both Walmart and Target carry a wide array of organic milk, organic cheese, organic butter, and yogurt, along with organic chicken and organic chicken eggs.

Organic animal proteins sold at grocery stores are taking a larger part of the overall pie, rising to 7% on average in the Q2. This compares to approximately 5% in 2018 and 5.5% in 2019. The upward trend should continue to perpetuate as more products become available.

Despite the drop in organic corn prices, organic soybean prices continue to remain buoyed as demand remains strong and supply is still scarce.

Temporary Slaughterhouse Closures Still Weigh on Organic Corn Demand

Organic corn prices remain soft and continue to feel the impact of higher imports and temporary loss of demand during April and early May. While demand has rebounded, the softness came just as imports surged creating an overhang that has yet to be worked off.

Organic chicken slaughter by weight has rebounded back to the levels that are consistent with this time of year. The 4-week moving average of organic chicken slaughter by weight has surged higher following a drop in April due to the closures of several slaughterhouses throughout the United States. In mid-April, there were three slaughterhouses in Pennsylvania alone that were closed due to the spread of COVID-19. Three months later, nearly all the slaughterhouses in the US are open or partially open.

The decline in organic chicken slaughter during April and early May led to a temporary halt in organic feed demand. While this has rebounded, it has yet to accelerated to catch up to retail sales demand for organic chicken. Mid-west merchandisers are saying that there is a plethora of supply on the interior of the US and they are looking for the coasts to increase demand and ship from the interior out to the coasts. Organic chicken slaughter by weight is down slightly more than 2% year over year for the first 28-weeks of 2020 compared to the same period in 2019.

While demand has been steady, the real catalyst for the decline in organic corn prices and other organic prices has been the volume of supply. Organic whole corn imports are projected to rise 35% year over year for the 2019/2020 season according to The Jacobsen. This compares to organic cracked corn imports which are forecast to decline approximately 3% year over year for the 2019/2020 season. Organic soybean imports are projected to decline by 12% year over year. Most of the increase in organic whole corn imports came from Argentina. One benefit of lower US domestic organic corn prices is that imports have become less competitive. This should reduce imports of organic whole corn during the 2020/2021 season allowing organic corn prices to stabilized and eventually grind higher.

US Grocery Store Retail Sales Rise Putting Upward Pressure on Organic Soybean Prices

Organic soybean prices remail elevated along with organic soybean meal prices, as shipments from India remain below average. News from India, the largest shipper of organic soybean meal to the United States, describes a situation where shipments are behind and will likely take approximately 60-days to catch up according to Merchandisers.

COVID infections are accelerating, now that the country has loosened restrictions and allowed states and local governments to make their own decisions about movements. India is the fourth worst-hit country in the world according to Johns Hopkins University data. The number of cases has spiked in recent days and the cumulative numbers are now over 332,000. While this is not a certainty, there could be another lockdown if the cases in India continue to spiral out of control. With nearly 70% of the organic soybeans/meal import coming from India, prices could remain elevated and climb higher.

US Retail Sales Surge

US retail sales surged higher in May rising nearly 18%, with most of the gains in the auto sector. There were also very strong gains in the grocery store sector, which should help continue to buoy organic animal protein retail sales (eggs, chicken, turkey, dairy). Grocery store sales rose a robust 14.3% year over year in May. With restaurants still having a difficult time opening, this sector should continue to remain buoyed.

*Source St. Louis Fed

Restaurants face a cash crunch. Not only are restaurants in need of cash for their reopenings they need to deal with overdue bills. Food suppliers are also in a bind as most of their supply chain was crushed by the stay at home orders. Restaurants, with their high failure rate even in good times, have trouble getting financing from banks, and the situation is worse now. This could further put upward pressure on grocery store retail sales further buoying organic grain prices.

WTI and Copper Bought, Gold sold as Risk on Reigns

Saxo Bank publishes two weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.

The below summary highlights futures positions and changes made by hedge funds across 24 major commodity futures up until last Tuesday, June 2. A week where appetite for risk driven by stock market euphoria leading to hopes of a V-shaped recovery continued to be the dominant force.

The Bloomberg Commodity Index rose 0.7% with gains in energy, metals and grains being off-set by losses in softs and livestock. Speculators only made small changes to their positions with the net-long across 24 major commodity futures increasing by 2% to 545k lots. Buying of WTI crude oil, gas oil, copper and cotton being off-set by selling of gold, soybeans, corn and coffee.


Buying of WTI crude oil extended into a 9th week with funds adding 17k lots to bring the net-long to 380k lots or 380 million barrels, the highest since July 2018. Short sellers added small length for a second week thereby keeping the long/short ratio steady. The Brent crude oil net-long saw a small reduction as short-sellers added length for the first time since March. Despite dropping by almost 9% the natural gas long was kept close to unchanged with both long and short positions rising.

OPEC and its oil-producing allies agreed on Saturday to extend the group’s historic 9.7 million barrels/day production cut by one month to the end of July. As we highlighted in our latest update the risk of failure, despite concerns about non-compliance from a handful of producers, was limited given the need to support the price while lockdowns are eased and demand recover. A recovery that potentially risks being slower than the market expects due to the risk of second waves.

According to the latest weekly EIA report, demand for distillates in the US, which is mainly diesel, hit a 1999 low some 30% below the five-year average. Gasoline demand meanwhile has recovered but was 1.9 million barrels/day or 25% below the average for this time of year. With the deal having been all but priced in ahead of the meetings the risk to crude oil remains balanced. Speculative momentum may see both WTI and Brent take aim at closing the gaps to $41.05/b and $45.18/b respectively.

However much higher prices at this early stage in the recovery carries the risk of becoming self defeating as it invites back increased production from high cost producers, not least along the US shale patch. The market may soon also begin to focus on rising production after July from core OPEC members while Libya is showing signs of returning production.


The lack of short-term tactical opportunities together with the rising risk appetite seen across other asset classes, continued to cut interest in gold. Last week speculators cut bullish bets on COMEX gold futures by 8% to 137k lots, a one-year low. This during a time where demand for gold via bullion backed exchange-traded funds registered a new record with total holdings rising above 100 million ounces. Part of this development may be a product specific challenge that the futures contract currently faces.

The transatlantic disconnect that occurred between gold futures traded in New York and spot gold traded in London back in March left many market makers with heavy losses. This after the spot to futures spread, the so-called Exchange for physical or ETF, blew out thereby forcing cut backs and reduced risk appetite among market makers normally assuring a well functioning market place. These developments are likely to have led to some investors and traders instead focusing on bullion-backed ETFs.

The silver net-long held steady at 27k lots with the near 4% rally failing to attract fresh long positions. Potentially due to the fact that silver’s recent outperformance against gold reached its target as highlighted through the gold-silver ratio. Additional gains in silver may now require support from gold which struggled towards the end of week when a stronger than expected US job report sent real yields higher and gold lower.

HG Coppers continued recovery and flirtation with key resistance at $2.50/lb – that got broken on Thursday – finally saw the net switch to a long position for the first time since January. Dictated by the mentioned breakout funds are likely to add additional speculative length with the price now potentially taking aim at $2.60/lb.


The UN FAO’s Global Food Price Index reached the lowest monthly average since December 2018 last month. Covid19-related declines extended to a fourth month with all sub-indices with the exception of sugar seeing declines. A development which is also being replicated by the speculative exposure with hedge funds holding net-short positions in seven out of the ten grains and softs contracts tracked in this report.

Selling of corn continued with the net reaching a one-year high at 282k lots. This despite signs of a recovering price in response to increased ethanol-linked demand, The rising fuel cost theme also supported another week of short-covering in sugar. Hardest hit was Arabica coffee after the recent technical break below key support wiped out the remaining long with a net-short of 7k lots emerging.

Ole Hansen, Head of Commodity Strategy at Saxo Bank.

Start trading now

This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of Saxo Bank Group through RSS feeds on FX Empire

Silver bought, Gold sold ahead of Breakout

Saxo Bank publishes two weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.

The below summary highlights futures positions and changes made by hedge funds across 24 major commodity futures up until last Tuesday, May 12. Following a couple of weeks of strong energy-led gains, the Bloomberg Commodity Index traded lower by 1.2% in the week to May 12. In response to this speculator’s cut bullish commodity bets by 9% to 567k lots. Most of the selling was seen in natural gas, Brent crude oil, corn and gold while buyers concentrated their efforts in WTI crude oil, soybeans and live cattle.


The divergence in speculative interest between WTI and Brent crude oil continued in the week to May 12. The 5% rally in CLM0 attracted another 25k lots of fresh longs with the net rising to 325k lots, the highest since September 2018. Brent crude oil (LCON0) meanwhile traded lower by 3% resulting in the net long being cut by 21k lots to 156k lots. The combined net-long reached a three months high at 481k lots with WTI contributing two-third of the nearly 300k lots funds have added during the past six weeks.

As mentioned in my latest ‘COT, the short-lived collapse to a negative WTI price last month probably saved the market. It helped accelerate dramatic cuts in global production, estimated by the IEA to hit 12 million barrels/day this month. With demand beginning to recover and US producers having made substantial cuts, WTI crude oil has so far been the go to contract for bullish speculators. However, driving the price to high before fundamentals can support a sustained recovery carries the risk of US shale oil producers turning the taps back on to soon.

Natural gas’s failure to sustain a rally above $2/therm helped trigger a 19% correction and a 30% reduction in the net long to 112k lots. The price had rallied strongly from the March low on the outlook for lower production from associated oil production. Milder weather combined with continued lockdowns leading to lower demand and reduced export demand for LNG all helped drive the price lower.


Gold longs were cut to a fresh 11-month low at 161k lots as the price continued to struggle to break it’s $1700/oz shackle. Silver buyers meanwhile returned to increase the net-long by 35% ahead of the Thursday spike back above $16/oz. The white metal has now retraced more than 61.8% of the February to March collapse thereby attracting renewed demand from speculators who in recent weeks had cut net-longs by 85% from the February peak.

HG Copper traders were the least bearish since January after cutting the net-short by 18% to 13k lots, Further upside however remains doubtful with economic data beginning to show the horrendous damage done to the global economy from many weeks of inactivity. Something that was highlighted by the data showing that the change in position was driven by short-covering and not fresh longs.


Another year of plenty supplies across the three major crops are being projected by the U.S. Department of Agriculture in their latest outlook from May 12. Only a deteriorating weather outlook over the coming months or a pickup in U.S. export sales – unlikely given the strong dollar – can prevent stocks building following another bumper harvest in the U.S. and around the world. Overall the grains sector was net-sold with buying of soybeans (+24k) being off-set by wheat (-0.9k) and not least corn where 24k lots of selling lifted the net-short to a one-year high at 214k lots.

All four soft commodities were net bought despite cotton being the only contract being supported by a higher price. Buying of sugar and coffee occurred despite the headwind from a free falling Brazilian real.

What is the Commitments of Traders report?

The Commitments of Traders (COT) report is issued by the US Commodity Futures Trading Commission (CFTC) every Friday at 15:30 EST with data from the week ending the previous Tuesday. The report breaks down the open interest across major futures markets from bonds, stock indexes, currencies and commodities. The ICE Futures Europe Exchange issues a similar report, also on Fridays, covering Brent crude oil and gas oil.

In commodities, the open interest is broken into the following categories: Producer/Merchant/Processor/User; Swap Dealers; Managed Money and other.

In financials, the categories are Dealer/Intermediary; Asset Manager/Institutional; Managed Money and other.

Our focus is primarily on the behavior of Managed Money traders such as commodity trading advisors (CTA), commodity pool operators (CPO), and unregistered funds.

They are likely to have tight stops and no underlying exposure that is being hedged. This makes them most reactive to changes in fundamental or technical price developments. It provides views about major trends but also helps to decipher when a reversal is looming.

Ole Hansen, Head of Commodity Strategy at Saxo Bank.

Start trading now

This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of Saxo Bank Group through RSS feeds on FX Empire

Organic Soybean Prices Remain Robust as Trend in Organic Chicken Retail Sales Rise

Organic soybean prices continue to climb despite a temporary drop in organic chicken slaughter. The lack of home ground domestic US soybeans has the US relying on India. Imports have slowed in May according to The Jacobsen, leaving several consumers short.

Organic Corn Prices Remain Soft

Spot organic corn prices remain soft as organic chicken feed demand has temporarily eased. Producers are putting their feed-demand temporarily on hold as slaughterhouses recover from closures due to COVID-19. Slaughterhouses are in the process of disinfecting plants and revamping operations to provide a safer working environment. Organic chicken slaughter tumbled in early April, dropping nearly 30% but has rebounded about 50% of the losses over the past 5-weeks.

Organic Chicken Sales Index Trends Higher

What is surprising is that retail demand has remained steady, as supermarkets continue to run through inventories. Some of the major chicken producers see meat production taking a while to rebound. Plants in Pennsylvania, Colorado, Minnesota, and Wisconsin are operating at 70-90% of capacity, according to reports.

The dip in supply of organic chickens has come just as home stockpiles are dwindling. This should put upward pressure on organic chicken prices. The trend in organic retail sales is expected to climb by 2% year over year for the season-ending September 2020, according to The Jacobsen.

The trend in monthly organic chicken sales is upward sloping rising from left to right which points to continued rising organic chicken sales. The rise in organic chicken prices are unlikely to dent consumption, and slaughter should rebound before demand destruction occurs. Solid demand and tailwinds created by US stimulus are likely to keep upward pressure on organic commodities prices, according to a price forecast from The Jacobsen.

Another Year of Plenty Awaits the Grain Market

What is our trading focus?

  • WHEATJUL20 – CBOT Wheat
  • CORNJUL20 – Corn
  • SOYBEANSJUL20 – Soybeans

Grain prices are generally trading softer following the monthly release yesterday of the World Agriculture Supply and Demand Estimates report (WASDE) from the US Department of Agriculture.

This was the first report to include projections for ending stocks at the end of the new 2020-21 crop year which runs until August next year. Across the board, another year of plenty of supplies is being projected with only a deteriorating weather outlook over the coming months preventing another bumper harvest in the U.S. and around the world.

Key takeaways:

Corn: Supplies will rise to their highest in 33 years due to massive plantings and what is expected to be a record crop in the 2020/21 marketing year.

Soybeans: The USDA raised its fore forecast of 2019-20 soybean ending stocks to 580 million bushels, up from 480 million last month and above the highest expectations. For 2020-21 the ending stocks was projected to fall to 405 million bushels, below the average estimate.

Wheat: While lowering the projected 2020-21 U.S. ending stocks to 909 million bushels from 978 million this year, it was still well above expectations at 819 million. Adding further pressure to U.S. wheat prices was the a jump in global ending stocks to a record 310 million tons. A recovery in Russian and Australian productions thereby making it harder for U.S. farmers to compete for export orders, unless the dollar should weaken over the coming period.

The uptrend in wheat from the 2019 low is once again being challenged with a break below $5.05/bu on the continuation chart signalling an extension to the next key level of support at $4.91/bu, the March 17 low.

Corn meanwhile remains stuck near a 13-year low with support at the psychological important $3/bu level so far holding. The price has struggled amid the outlook for another bumper crop emerging across the U.S. plains together with stiff competition from producers in Argentina and Brazil both reaping the benefit from much weaker currency. Adding to the recent weakness has been the collapsing oil price as it has cut demand from ethanol producers who normally account for one-third of U.S. demand.

Soybeans has been trading sideways for the past two years with the price struggling to move higher from a near 12 year low around $8/bu. Worries about Chinese demand as the Covid-19 blame game heats up and the mentioned competition from exporters in Brazil and Argentina are two of the main obstacles keeping the price down.

Ole Hansen, Head of Commodity Strategy at Saxo Bank.

Start trading now

This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of Saxo Bank Group through RSS feeds on FX Empire

Organic Soybean Acres Planted are Likely to Rise


Organic soybean planting is likely to rise related to organic corn planting during the coming harvest according to The Jacobsen. This is because the average value per acre for organic corn has declined substantially relative to the value per acre for organic soybeans. The relative value is measured by The Jacobsen Planting Acre Index.

The Jacobsen planting acre index is beginning to consolidate at 4-year lows. The index calculates the theoretical value of an acre of organic corn relative to the theoretical value of an acre of organic soybeans. The assumptions used are based on the Jacobsen calculation of the average yield per bushel in the Midwest for both organic corn and organic soybeans. The index ignores any additional costs for switching and any additional costs of planning organic corn compared to organic soybeans.

After hitting a higher of more than $800 per bushel in August of 2018 (which coincides with the 4-year high of organic corn prices The JacobsenPUATF), the index has declined by more than $500 per bushel and is hovering below $300 for the first time in the past 4-years.

The low level of the index means that the strong demand for soybeans and the lack of supply during the 2019/2020 season, makes organic soybeans a good option in the rotation despite the value being lower than the value of an acre of organic corn in the mid-west.

Prices Remain Stable

Organic corn prices are stable with little to no activity in the spot market hovering around $7/$7.1 picked up at the farm in the mid-west. Some merchandisers are now quoting $7 delivered into their mid-west facilities. This could put additional downward pressure on prices. Organic corn prices in South Central PA remain near $350 per short-ton delivered for new crop, and slightly below for spot. Organic soybean prices are hovering just above $20 per bushel, but there is little product around. Organic soybean meal prices are hovering near the $760 level mid-west, and have similar values in PA.

Organic Soybean Prices Could Top $23 per Bushel as Panic Buying Accelerates

The organic soybean complex is in danger of experiencing upside momentum, which could significantly buoy organic soybean prices. Organic soybean prices are elevated, but activity is light because there is not a lot of product available. Organic soybean imports in March were light as expected. April should be similar, according to The Jacobsen.

A question for traders is how quickly India will be able to rebound from port closures. The “shelter in place” order sent workers from other countries home until it was safe to return and work was available. Indian exporters are saying that flood of Egyptian workers has left the country. Getting the engine that creates the organic soybean export machine up and running could take some time. For the 2019/2020 season, Jacobsen expects imports to use to hover above 70%. This means that 70% of the organic soybeans consumed in the US are imported.

For US consumers, unfortunately, there are no sellers according to merchandisers. This includes both organic soybean and organic soybean meal. This could create panic buying sending prices temporarily higher. The Q3 is likely a target period after the pipeline from India goes dry for most of the Q2.

Organic soybean imports were robust in February the last official month reported by the US Customs Department. There was small growth for the month, year over year. The Jacobsen forecast that March organic soybean imports were no-existent. Less than 1,000 metric tons likely arrived.

The Jacobsen sees organic soybean and organic soybean meal imports remaining well below the historical norm for the Q2, and then potentially rebounding significantly in the Q3 due to pent up demand. this could push organic soybean prices mid-west up to $23 per bushel. It could also push organic soybean meal prices above $850 per short-ton. The Jacobsen full forecast along with our organic soybean balance sheet can be found in The Jacobsen organic market intelligence report.

Surprising Soybean Oil Export Numbers

Soybean oil exports have been much stronger than expected during the 2019/20 marketing year. Many analysts (including The Jacobsen), believed that rising biofuel output would drive domestic basis levels higher, which would limit U.S. soybean oil exports. As a result, predictions of marketing-year exports were generally below the 1.94 billion pounds shipped last year. However, with about half of the marketing year gone, forecasts have risen above that level, but they may continue to grow in the coming months.


Export commitments for U.S. soybean oil totaled 776,200 tonnes (1.71 billion pounds), which is 45 percent above the same week last year and the highest level since at least 2016/17 when the United States exported 2.55 billion pounds of soybean oil. Whether exports in 2019/20 remain above 2016/17 for the rest of the marketing year and exceed the 2.55 billion pounds shipped will depend on developments in the energy industry and how quickly the U.S. economy recovers from the coronavirus pandemic. That said, it seems unlikely that U.S. shipments will rise above the 2016/17 total this year.

The pandemic is the most obvious reason soybean oil exports are unlikely to exceed the 2016/17 total. With the world economy grinding to a halt, demand for vegetable oil, in the short term, will be substantially lower than it was just a month ago. However, even if the drop in economic activity is not as dire as many analysts expect, soybean oil exports are likely to remain below 2016/17.

The best-case scenario for soybean oil exports would be a recovery in world demand while usage in biofuel remains weak. With tensions between Saudi Arabia and Russia continuing for at least the short term, it seems likely consumption of soybean oil for biofuel production will remain below expectations. That should keep U.S. interior basis levels relatively low and, in theory, should make soybean oil more competitive. However, the critical price that will drive U.S. exports will not be the basis. The spread between soybean oil and palm oil will be the crucial indicator to watch to understand the strength of U.S. soybean oil exports over the next six months.

The spread, which bottomed just below parity earlier in the year, widened to three cents in March. Given the relative fundamental situations, The Jacobsen expects the relative value will continue to expand and could reach five or six cents during the second half of the marketing year. When the spread was close to parity, many end-users substituted soybean oil for palm oil, which raised U.S. exports. With the spread moving in the opposite direction, The Jacobsen expects soybean oil export sales to slow as the relative value of soybean oil moves higher.

On Thursday, The United States Department of Agriculture (USDA) reported export sales of soybean oil for 2019/20 delivery during the week ending March 12 totaled 18,900 tonnes, which was in line with market expectations that ranged from 5,000 to 35,000 tonnes. Sales for 2020/21 delivery totaled 2,000 tonnes. The total was 2,400 tonnes above the five-year average for the week but was 34 percent below the four-week moving average. Weekly shipments of 39,100 tonnes were in line with the five-year average for the week and the four-week moving average but rose 25,200 tonnes from the prior week. The Jacobsen expects the trend of sales falling below the four-week moving average and shipments moving above the four-week moving average to continue as the spread moves higher. This has nearly impacted organic soybean prices.

The Jacobsen recently raised its export forecast to two billion pounds, which is in line with USDA’s March forecast. While commitments already represent more than 85 percent of that total, The Jacobsen does not expect to raise its forecast and may even cut its projection if the impact of the pandemic on world vegetable oil demand slows consumption more than expected.

Organic Retail Demand is Expected to Rise

Organic retail demand is predicted to rise during the balance of the 2019/2020 season according to the Jacobsen insight. A strong tailwind lead by increased demand for food purchased at supermarkets and big-box stores will buoy demand. The rapid shift in US short term interest rates, in conjunction with the fiscal policy, will help further catapult purchases of organic goods when pent up demand is unleashed and the coronavirus fades. This should help buoy organic grain prices including organic corn prices and organic soybean prices.

Social distancing is poised to buoy demand for retail organic food. Supermarkets in impacted coronavirus areas are having a tough time holding on to consumer staples like water, and meat, that can be frozen. While there might be a pause in demand as this scenario fades, strong monetary and fiscal policy will buoy demand. The last time US interest rates were dropped to zero, they stayed there for 7-years.

Fiscal and Monetary Policy Boost

The White House announced several fiscal stimulus policies as well as formulated a policy on social distancing. They are requesting social distancing for the next 15-days. This will likely buoy demand for organic proteins including eggs, dairy, and chicken. While there will likely be a dip initially when things “go back to normal”, the stimulus in the economy should allow for an upgrade cycle for those who might consider organic as a choice over conventional. The fiscal policy in conjunction with the powerful monetary policy should help accelerate growth in the Q4 of 2020 into the Q1 of 2021.

Continued Decline in Crude Does Not Necessarily Imply Continued Pressure on Soybean Oil Prices

If crude oil prices resume the move lower, it could pressure soybean oil prices, but at some point, the impact of the marginal move lower in crude may be minimal for soybean oil. The main reason for the ultimate disconnect will be strong export demand, as, despite the expected slowdown in the world economy, world vegetable oil fundamentals remain bullish. However, there are other reasons the two prices may become less correlated than they have been recently.

The second reason that soybean oil prices could ultimately disconnect from crude oil is that the decline in soybean oil has also made it substantially more competitive with low carbon intensity (CI) score feedstocks. The decline in soybean oil prices has been much more significant than the decrease in the value of the low CI feedstocks due to the value of credits under the Low Carbon Fuel Standard (LCFS) in California. The credits continue to support low CI demand, and The Jacobsen expects low CI prices to remain supported. As a result, the relative prices make soybean oil, a much more competitive feedstock for any producer, not shipping products to the California market. At equal prices, many producers will favor soybean oil over the low CI feedstocks, which should ensure that soybean oil demand remains strong in the eastern half of the country (or at the very least, east of the Mississippi River). It should not impact organic soybean prices.

The second reason is why The Jacobsen believes it may have been premature for the United States Department of Agriculture (USDA) to cut its forecast of 2019/20 U.S. soybean oil usage in biodiesel by 200 million pounds. Ultimately, the reduction may prove prescient, but it will take a couple of months to understand how the impact of the decline in crude oil prices will translate into renewable fuel production. It will also be at least a month before analysts and traders have a better understanding of the length of the decline in crude oil prices.

The final reason soybean oil prices could disconnect from crude oil is fund activity. If funds continue to liquidate long oil share positions, soybean oil prices may move lower, even if crude oil is moving higher. Likewise, if funds start to rebuild long oil share positions, soybean oil prices could move higher while crude is moving lower. If crude oil prices continue to move lower, funds may continue to liquidate. However, if crude moves lower and the demand from biofuel producers remains at the levels The Jacobsen expects, there may be a rush to reverse those positions.

No matter what happens, soybean oil prices are likely to remain volatile for the foreseeable future. End users should take advantage of the decline by extending coverage, while producers should only sell minimal volumes and wait for the rebound in prices The Jacobsen expects to occur in the early summer.

Organic Soybean Prices Could Surge on African Swine Flu Import Ban

The goal is to protect the U.S. pork industry from the introduction of the virus. The question for those in the trade is how this will affect organic soybean prices. Additionally, if this ban comes to pass, how long before the Pork Industry realizes that organic corn could also carry ASF, which could impact organic corn prices.

The U.S. pork industry wants Secretary Perdue to restrict the import of organic soy products for animal-feed under the Animal Health Protection Act from all ASF-positive countries. The Secretary has broad authority under the Animal Health Protection Act to prevent the introduction of foreign animal diseases.

There are several countries that currently are experiencing an ongoing battle with ASF. Of the countries that import organic soybeans to the US in 2019, Ukraine, Russian and Moldova, along with China are currently battling ASF according to the World Animal Health Information Database.

The volumes of imports from impacted countries make up approximately 25% of the total organic soybeans that were imported into the United States in 2019. Separately, Romania tops the list of countries that are impacted by ASF that exported organic soybean meal into the United States in 2019. Approximately 9% of the organic soybean meal that was imported into the US in 2019 came from Romania.

So how will this impact the price of the organic soybean complex? With tight supplies already driving organic soybean prices above $20 per bushel in the mid-west and $780 for organic soybean meal per short ton in South Central PA, the result should be bullish.

Approximately 65K metric tons of organic soybeans and nearly 18K tons of organic soybean meal would possibly be restricted. Organic soybean/meal imports made up slightly more than 70% of the organic soybean/meal used for feed during 2019, and merchandisers are already having a difficult time finding any available organic soybeans in the US. While the restriction would have an immediate impact on sentiment likely pushing organic soybean/meal prices higher.

*Countries in bold are experiencing ASF

Oil Bought, Gold Sold Ahead of Virus Outbreak

Saxo Bank publishes two weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.

Last week’s report highlights the changes made by hedge funds across key commodities just before the corona virus became the main news item to impact and rattle global markets. The worrying news from China raised concerns about its potential impact on demand for key commodities from crude oil to copper.

Crude oil as well as products have extended their losses today as the market continues to grapple with the corona virus news and its short to medium term impact on global fuel demand. While China has restricted travel within but also out of the country the market reaction at this stage is mostly a matter of confidence taking a hit.

However a prolonged outbreak combined with a continued spreading will reduce global fuel demand as it alter the way people travel and commute around the world.

Despite multiple risks to supply from key OPEC producers Brent crude oil has slumped to a three-month low today and the reason for this reaction can be traced back to the COT report which highlight just how unprepared speculators and funds were.

The chart below shows the net-long position held by money managers in the five major crude oil and product contracts. The 860k lots net-long in the week to January 21 was just 6% below the December 24 peak but double the October 8 low when Brent traded as low as $58/b.

Brent crude oil was left particularly exposed once the price broke below key support on Wednesday. Two weeks of price weakness had failed to trigger a reduction in the net-long. Last Tuesday it had even risen by 2.8k lots to reach a 15-month high at 429k lots.

In natural gas the slump below $2/therm supported another expansion in the already record short to 292k lots. This in response to weak winter demand and strong production.

Gold and silver both saw light selling last week before running higher on Friday in response to corona virus safe haven demand as stocks dropped. In the week to January 21 gold’s net-long was reduced by 3k lots to 259k lots, some 11% below the record peak last September.

Today in early trading gold extended its Friday rally to hit $1588/oz before drifting lower. The lack of a firm response similar to the one on January 8, when the U.S.-Iran war threat briefly took it above $1600/oz, point towards a market in general risk off mode. Something that in some cases can also negatively impact a safe-haven asset like gold, especially given the current elevated position and worries about demand from China.

The platinum long reached a new record at 53k lots, some 23% above the previous record from August 2016 when the price was trading at $1150/oz. Just before the longest price slump since 2014 the copper long had been kept unchanged at 7.2k lots.

Just like crude oil, copper and iron ore, all pro-cyclical commodities, have taken a beating from a renewed and currently serious risk to global economic growth. While iron ore dropped 6% overnight in Asia HG Copper lost another 1.8% with HGH0 once again testing the November and December lows.

The soybean complex continued to be sold on muted U.S. soybean sales to China. On Friday soybean futures hit a six-week low as China virus developments further dimmed the prospects for sales picking up before a deluge of Brazilian beans hit the market soon.

Both Kansas and Chicago wheat were bought as the price expanded to a 16 month high in response to strong overseas demand and weather worries. Both subsequently suffering a setback due to the general risk off hitting the commodity sector.

Soft commodities were mixed with cocoa and especially sugar seeing continued strong demand. Coffee long liquidation stayed subdued despite seeing the price down 20% from the December peak.

Ole Hansen, Head of Commodity Strategy at Saxo Bank.

Start trading now

This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of Saxo Bank Group through RSS feeds on FX Empire