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The time frame for the current Commitments of Traders report is from Wednesday, May 6 through Tuesday, May 12.

Soybeans:

For the week, July soybeans lost 23.00 cents, August -23.00, new crop November -17.50. The COT report revealed that managed money liquidated 4,176 of their long positions and added 18,601 to their short positions. Commercial interests added 4,163 to their long positions and also added 135 to their short positions. As of the latest report, managed money is short soybeans by a ratio of 1.48:1, which is up from the previous week of 1.19:1 and the ratio of two weeks ago of 1.27:1.

Soybean meal:

For the week, July soybean meal lost $10.10, August -9.60, new crop December -8.40. The COT report revealed that managed money liquidated 1,358 of their long positions and added 8,217 to their short positions. Commercial interests added 8,574 to their long positions and liquidated 454 contracts of their short positions. As of the latest report, managed money is short soybean meal by a ratio of 1.18:1, which is an increase from the previous week of 1.002:1 and a complete reversal from the ratio of two weeks ago when managed money was long soybean meal by a ratio of 1.06:1.

Soybean oil:

For the week, July soybean oil advanced 11 points, August +14, new crop December +21. The COT report revealed that managed money liquidated 1,099 of their long positions and also liquidated 4,889 of their short positions. Commercial interests liquidated 1,401 of their long positions and added 10,017 contracts to their short positions. As of the latest report, managed money is long soybean oil by a ratio of 1.98:1, which is above the previous week of 1.80:1 and the ratio two weeks ago of 1.30:1.

Corn:

For the week, July corn advanced 2.50 cents, September +4.00, new crop December + 4.50. The COT report revealed that managed money added 14,890 contracts to their long positions and also added 14,659 to their short positions. Commercial interest added just 22 contracts to their long positions and added 15,932 to their short positions. As of the latest report, managed money is short corn by a ratio of 1.68:1, which is down slightly from the previous week’s ratio of 1.73:1 (the high short ratio thus far in the bear market), and slightly above the ratio of two weeks ago of 1.66:1.

Chicago wheat: On May 15, July Chicago wheat generated a short-term buy signal, but remains on intermediate-term sell signal.

For the week, July Chicago wheat advanced 29.50 cents, September +28.25, new crop December +25.75. The COT report revealed that managed money added 1,339 to their long positions and liquidated 2,424 of their short positions. Commercial interests liquidated 341 contracts of their long positions and added 8,466 to their short positions. As of the latest report, managed money is short Chicago wheat by a ratio of 3.14:1, which is down somewhat from the previous week of 3.28:1 (the high short ratio thus far in the bear market), and about the same as the ratio two of weeks ago of 3.15:1.

Kansas City wheat: On May 15, July Kansas City wheat generated a short-term buy signal, but remains on intermediate-term sell signal.

For the week, July Kansas City wheat advanced 33.25 cents, September +33.25, new crop December +33.25. The COT report revealed that managed money added 955 contracts to their long positions and liquidated 3,395 of their short positions. Commercial interests liquidated 1,146 of their long positions and added 2,180 to their short positions. As of the latest report, managed money is short Kansas City wheat by a ratio of 1.32:1, which is down from the previous week of 1.48:1 and the ratio of two weeks ago of 1.43:1.

Year to date, July soybean oil is the out performer with a gain of 1.60%, July soybeans -8.08%, July soybean meal -10.61%, July corn -11.39%, July Chicago wheat -14.48%, July Kansas City wheat -14.79%.

Thus far in the second quarter, July soybean oil is the out performer with a gain of 8.00%, July Chicago wheat -0.58%, July soybeans -2.51%, July Kansas City wheat -3.90%, July corn -4.88%, July soybean meal -6.73%.

Cotton:

For the week, July cotton advanced 68 points, new crop December +88, March 2016 +79. The COT report revealed that managed money liquidated 5,788 of their long positions and added 1,754 to their short positions. Commercial interests liquidated 893 contracts of their long positions and also liquidated 7,367 of their short positions. As of the latest report, managed money is long cotton by a ratio of 2.95:1, which is down from the previous week of 3.44:1 and the ratio of two weeks ago of 3.37:1.

Sugar #11:

For the week, July sugar lost 53 points, October -58, March 2016 -57. The COT report revealed that managed money added 2,562 contracts to their long positions and liquidated 26,170 contracts of their short positions. Commercial interests added 20,505 contracts to their long positions and also added 58,412 to their short positions. As of the latest report, managed money is short sugar by a ratio of 1.12:1, which is down from the previous week of 1.33:1 and the ratio of two weeks ago of 1.26:1.

The current short ratio of 1.12:1 is the lowest since the COT report of February 17, 2015 when managed money was short by a ratio of 1.05:1.

Coffee:

For the week, July coffee advanced 3.60 cents, September +3.60, December +3.05. The COT report revealed that managed money liquidated 2,294 of their long positions and added 216 contracts to their short positions. Commercial interests added 954 to their long positions and liquidated 549 of their short positions.As of the latest report, managed money is short coffee by a ratio of 1.33:1, which is up from the previous week of 1.24:1 and the ratio of two weeks ago of 1.15:1.

The current ratio of 1.33:1 is the highest recorded during the course of the bear market in coffee.

Cocoa:

For the week, July cocoa advanced $188.00, September +188.00, December +183.00. The COT report revealed that managed money added 3,759 contracts to their long positions and liquidated 1,687 of their short positions. Commercial interests liquidated 1,575 of their long positions and added 5,867 to their short positions. As of the latest report, managed money is long cocoa by a ratio of 2.41:1, which is up from the previous week of 2.00:1 and the ratio of two weeks ago of 2.27:1.

Year to date, July cocoa is the out performer with a gain of 8.45%, July cotton +7.81%, July sugar -15.48%, July coffee -19.58%.

Thus far in the second quarter, July cocoa is the out performer with a gain of 16.08%, July sugar +6.88%, July cotton +5.33%, July coffee +1.58%.

Live cattle: On May 14 June and August live cattle generated short term buy signals, which reversed the April 13 short-term sell signals. June and August cattle remain on intermediate term buy signals.

For the week, June live cattle advanced 1.02 cents, August +98 points, October +47. The COT report revealed that managed money added 3,759 to their long positions and liquidated 1,687 contracts of their short positions. Commercial interests liquidated 1,560 of their long positions and added 2,769 to their short positions. As of the latest report, managed money is long live cattle by a ratio of 8.49:1, which is up from the previous week of 7.10:1 and the ratio of 6.76: 1 made two weeks ago.

The current ratio of 8.49:1 is the highest recorded since January 27, 2015 when managed money was long live cattle by a ratio of 9.73:1.During the span of the January 27 COT report, February 2015 cattle traded in a range of 1.48375-1.54950, or at about the current range traded during the past week for the June 2015 contract.

Lean hogs:

For the week, June lean hogs lost 1.47 cents, August -20 points, October -25. The COT report revealed that managed money added 3,453 to their long positions and liquidated 2,966 of their short positions. Commercial interests liquidated 5,165 of their long positions and added 4,857 to their short positions. As of the latest report, managed money is long lean hogs by a ratio of 1.79:1, which is above the previous week of 1.53:1 and the ratio of two weeks ago of 1.38:1.

Year to date, August live cattle is the out performer with a loss of 1.13%, June live cattle -1.96%, August lean hogs -6.82%, June lean hogs -8.96%.

Thus far in the second quarter, June lean hogs is the out performer with a gain of 9.60%, August lean hogs +8.00%, August live cattle +0.65%, June live cattle -0.03%.

WTI crude oil:

For the week, June WTI crude oil advanced 30 cents, July +19, August +19. The COT report revealed that managed money liquidated 14,831 contracts of their long positions and also liquidated 11,553 of their short positions. Commercial interests added 1,448 to their long positions and also added 4,004 to their short positions. As of the latest report, managed money is long WTI crude oil by a ratio of 5.19:1, which is an increase from the previous week of 4.58:1 and the ratio of two weeks ago of 4.15:1.

The current ratio of 5.19:1 is the highest recorded since the August 12, 2014 COT report when managed money was long WTI crude oil by a ratio of 5.44:1. The current ratio is substantially above the previous week’s high of 4.58:1 and the December 23, 2014 ratio of 4.56:1. The trading range encompassed by the COT report of December 23, 2014 was 54.08 – 58.98.

The trading range encompassed by the August 12, 2014 COT report was 96.55-98.58, or approximately $35.00 above the trading range for the June contract during the current COT report. Additionally, the net long position of managed money on August 12, 2014 was 218,475 contracts and in the current report, 263,032. In short, managed money is substantially more bullish today than they were when prices were trading in the high 90 dollar range.

Commercial traders were net short by 26,673 contracts on August 12, 2014 (short ratio of 1.12:1) and in the current report are net short by 167,404, or a short ratio of 1.71:1. Last week, we wrote about our reasons for thinking that WTI prices would stall at current levels. The fact is for prices to move considerably higher from here new buyers must be willing to pay ever increasing prices, and based upon recent history, we think this is highly unlikely. Market participants are well aware of burdensome stocks, and this should temper any major new buying.

Heating oil:

For the week, June heating oil advanced 5.11 cents, July +4.75, August +4.59. The COT report revealed that managed money added 1,000 contracts to their long positions and also added 775 to their short positions. Commercial interests added 9,421 to their long positions and also added 9,582 to their short positions. As of the latest report, managed money is short heating oil by a ratio of 1.23:1, which is about the same as the previous week of 1.24:1, but down from the ratio of two weeks ago of 1.39:1.

Gasoline:

For the week, June gasoline advanced 6.50 cents, July +5.93, August +5.40. The COT report revealed that managed money added 996 contracts to their long positions and also added 1,898 to their short positions. Commercial interests added 9,708 contracts to their long positions and also added 7,964 to their short positions. As of the latest report, managed money is long gasoline by a ratio of 1.63:1, which is down from the previous week of 1.68:1 and the ratio of two weeks ago of 1.70:1.

Natural gas: On May 13, June natural gas generated an intermediate term buy signal, after generating a short term buy signal on May 1.

For the week, June natural gas advanced 13.6 cents, July +14.2, August +14.2. The COT report revealed that managed money added 6,686 to their long positions and liquidated 13,755 of their short positions. Commercial interests liquidated 5,066 of their long positions and added 53 contracts to their short positions. As of the latest report, managed money is short natural gas by a ratio of 1.45:1, which is down from the previous week of 1.56:1 and the ratio of two weeks ago of 1.75:1 (the high short ratio recorded during the course of the bear market). 

The large position of short position held by managed money will continue to provide fuel for a continued upside move. Based upon open interest increases seen during the past week on price advances, it is evident that current holders of short positions are not panicking, but we expect this to change as prices continue to advance.

Year to date, June gasoline is the out performer with a gain of 17.93%, July Brent crude oil +16.28%, June heating oil +10.73%, June WTI crude oil +6.21%, June ethanol +3.26%, June natural gas +2.13%.

Thus far in the second quarter, June WTI crude oil is the out performer with a gain of 21.37%, July Brent crude oil +21.14%, June heating oil +17.05%, June gasoline +16.95%, June ethanol +12.98%, June natural gas +12.12%.

Copper:

For the week, July copper advanced 40 points. The COT report revealed that managed money added 8,928 to their long positions and also added 549 contracts to their short positions. Commercial interests liquidated 2,181 of their long positions and added 4,337 to their short positions. As of the latest report, managed money is long copper by a ratio of 3.17:1, which is up from the previous week of 2.77:1 and double the ratio of two weeks ago of 1.59:1.

Remarkably, the current ratio 3.17:1 is the highest since the COT report of July 22, 2014 when managed money was long by a ratio of 3.38:1. Also remarkable is the trading range encompassed by the July 22, 2014 COT report was 3.1620-3.2420, or approximately 20-25  cents above the trading range of the July contract encompassed by the current COT report.

The last time copper prices traded near the current level occurred in mid December 2014 and in the December 16, 2014 COT report managed money was short by a ratio of 1.14:1 while prices traded in a range of 2.8600-2.9600 during the time frame of the report. In the November 18, 2014 report, managed money was short by a ratio of 1.04:1 and prices traded in a range of 2.9820-3.0610.

The longer-term moving averages show that July copper remains in a bearish set up with the 50 day standing at 2.7686-200 day, 2.8820. With managed money holding a large net long position, copper is vulnerable to a correction to its 50 day moving average.

We would not be involved in copper. There are better trades on the board, especially gold and silver who have substantially lower ratios of managed money longs. Additionally, when looking at the performance of copper year to date and during the second quarter, it does not merit its current large net long position, and certainly doesn’t when comparing the current lopsided number of longs to previous periods when copper prices were trading at higher levels. July copper remains on a short and intermediate term buy signal

Palladium:

For the week, June palladium lost $7.40. The COT report revealed that managed money liquidated 252 contracts of their long positions and added 333 to their short positions. Commercial interest liquidated 573 contracts of their long positions and also liquidated 714 of their short positions. As of the latest report, managed money is long palladium by a ratio of 6.88:1, which is down from the previous week of 7.96:1 and the ratio of two weeks ago of 7.60:1.

Platinum:

For the week, July platinum advanced $25.60. The COT report revealed that managed money added 1,047 to their long positions and also added 1,572 to their short positions. Commercial interest liquidated 338 contracts of their long positions and also liquidated 2 contracts of their short positions. As of the latest report, managed money is long platinum by a ratio of 1.74:1, which is down from the previous week of 1.83:1, but up from the ratio of two weeks ago of 1.64:1.

Gold: On May 14, August gold generated a short-term buy signal, but remains on an intermediate term sell signal.

For the week, August gold advanced $36.30. The COT report revealed that managed money added 5,250 to their long positions and also added 388 to their short positions. Commercial interests added 441 contracts to their long positions and also added 3,599 to their short positions. As of the latest report, managed money is long gold by a ratio of 1.36:1, which is up slightly from the previous week of 1.30:1, but down from the ratio two weeks ago of 1.79:1.

Silver: On May 14, July silver generated short and intermediate term buy signals.

For the week, July silver advanced $1.098. The COT report revealed that managed money added 210 contracts to their long positions and liquidated 2,318 of their short positions. Commercial interests added 607 contracts to their long positions and also added 945 to their short positions. As of the latest report, managed money is long silver by a ratio of 1.47:1, which is up from the previous week of 1.36:1 and the ratio of two weeks ago of 1.17:1.

Year to date, July silver is the out performer with a gain of 12.72%, July copper +3.59%, August gold +3.33%, June palladium -0.91%, July platinum -4.89%.

Thus far in the second quarter, June palladium is the out performer with a gain of 7.60%, July copper +6.77%, July silver +5.81%, August  gold +3.49%, July platinum +0.67%.

Canadian dollar:

For the week, the June Canadian dollar advanced 61 pips. The COT report revealed that leverage funds liquidated 459 contracts of their long positions and also liquidated 7,803 of their short positions. As of the latest report, leverage funds are short the Canadian dollar by a ratio of 1.65:1, which is down from the previous week of 2.04:1 and the ratio of two weeks ago of 2.30:1.

Australian dollar:

For the week, the June Australian dollar advanced 1.32 cents. The COT report revealed that leverage funds liquidated 1,105 of their long positions and also liquidated 3,725 of their short positions. As of the latest report, leverage funds are short the Australian dollar by a ratio of 1.97:1, which is down from the previous week of 2.05:1 and down dramatically from the ratio of two weeks ago of 4.42:1.

Swiss Franc:

For the week, the June Swiss franc advanced 2.01 cents. The COT report revealed that leverage funds added 999 contracts to their long positions and liquidated 4,661 of their short positions. As of the latest report, leverage funds are long the Swiss franc by a ratio of 2.29:1, which is more than double the previous week’s ratio of 1.03:1, and a complete reversal from two weeks ago when leverage funds were short the Swiss franc by a ratio of 1.46:1.

British Pound:

For the week, the June British pound advanced 3.01 cents. The COT report revealed that leverage funds added 7,376 contracts to their long positions and also added 4692 to their short positions. As of the latest report, leverage funds are long the British pound by a ratio of 1.16:1, which is up from the previous week of 1.10:1 and a complete reversal from two weeks ago when leverage funds were short the British pound by a ratio of 1.74:1.

The reason for the modest increase in this week’s ratio was due to the large addition short positions, and since the cut off date for the tabulation of the COT report occurred on Tuesday May 12, we suspect many of these speculators have been blown out of their positions.

Euro:

For the week, the June euro advanced 2.59 cents. The COT report revealed that leverage funds liquidated 3,096 of their long positions and also liquidated 13,901 of their short positions. As of the latest report, leverage funds are short the euro by a ratio of 4.30:1, which is down fractionally from the previous week of 4.32:1 and down from the ratio of two weeks ago of 4.74:1.

Since the tabulation of the COT report on May 12, the June euro has rallied 2.44 cents, and similar to the pound, we suspect many additional shorts have been taken out.

Yen:

For the week, the June yen advanced 37 pips. The COT report revealed that leverage funds liquidated 4,676 of their long positions and also liquidated 7,960 of their short positions. As of the latest report, leverage funds are short the yen by a ratio of 3.41:1, which is above the previous week’s ratio of 3.09:1 and almost double the ratio of two weeks ago 1.85:1.

Dollar index:

The June dollar index lost 1.72 points. The COT report revealed that leverage funds added 294 contracts to their long positions and liquidated 4,730 of their short positions. As of the latest report, leverage funds are long the dollar index by a ratio of 1.17:1, which is a complete reversal from the previous week when they were short by 1.13:1. Two weeks ago, leverage funds were short the dollar index by a ratio of 1.81:1.

The positioning of leveraged funds in the dollar index has all the characteristics of commercial traders: They were massively short at the top of the market and now are increasing their long exposure at the bottom end of the trading range.

Year to date, the June Swiss Franc is the out performer with a gain of 8.49%, June dollar index +3.34%, June British pound +1.15%, June yen +0.29%, June Australian dollar -1.08%, June Canadian dollar -3.07%, June euro -5.55%.

Thus far in the second-quarter, the June euro is the out performer with a gain of 6.44%, June Swiss franc +6.18%, June British pound +6.15%, June Australian dollar +5.98%, June Canadian dollar +5.49%, June yen +0.54%, June dollar index -5.19%.

S&P 500 (250 x):

For the week, the June S&P 500 futures contract advanced 10.50 points. The COT report revealed that leverage funds added 265 contracts to their long positions and also added 791 to their short positions. As of the latest report, leverage funds are short the S&P 500 futures contract by a ratio of 1.18:1, which is above the previous week of 1.08:1. Two weeks ago, leverage funds were long by a ratio of 1.15:1.

Year to date, the NASDAQ 100 cash index is the out performer with a gain of 6.09%, S&P 400 cash index +5.43%, New York Composite cash index +3.59%, Russell 2000 cash index +3.26%, S&P 500 cash index +3.10%, Dow Jones Industrial Average cash index +2.52%.

Thus far in the second quarter, the NASDAQ 100 cash index is the out performer with a gain of 3.71%, New York Composite cash index +3.02%, Dow Jones Industrial Average cash index +2.79%, S&P 500 cash index +2.65%, S&P 400 cash index +0.48%, Russell 2000 cash index -0.70%.

10 Year Treasury note:

For the week, the June 10 year treasury note advanced six points. The COT report revealed that leverage funds added 46,658 contracts to their long positions and liquidated 91,231 of their short positions. As of the latest report, leverage funds are short the 10 year note by a ratio of 1.52:1, which is down from the previous week of 1.95:1 and the ratio of two weeks ago of 1.75:1.

In last weekend’s report, we cautioned clients that the market was set up for a sharp short covering rally.

From the May 10 Weekend Wrap:

“We think the short 10 year note trade is becoming very crowded, and although an aggressive bearish stance made sense after the generation of the short-term sell signal on April 29, it doesn’t make much sense today. The market is highly vulnerable to a good-sized short covering rally.”