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Market Sentiment
Neutral (Overbought)
Based on the latest 13 weeks of non-commercial positioning data. ℹ️

Oats (Non-Commercial)

13-Wk Max 1,743 2,067 355 140 1,742
13-Wk Min 523 1 -297 -899 -1,522
13-Wk Avg 1,014 879 27 -123 135
Report Date Long Short Change Long Change Short Net Position Rate of Change (ROC) ℹ️ Open Int.
November 19, 2024 1,320 15 -297 8 1,305 -18.94% 3,731
November 12, 2024 1,617 7 -126 6 1,610 -7.58% 4,132
November 5, 2024 1,743 1 0 0 1,742 78.67% 4,370
October 8, 2024 1,357 382 135 -21 975 19.05% 4,034
October 1, 2024 1,222 403 97 15 819 11.13% 3,998
September 24, 2024 1,125 388 355 124 737 45.65% 3,630
September 17, 2024 770 264 -85 -432 506 218.24% 3,363
September 10, 2024 855 696 53 -899 159 120.05% 3,556
September 3, 2024 802 1,595 84 -279 -793 31.40% 4,247
August 27, 2024 718 1,874 173 -193 -1,156 24.05% 4,810
August 20, 2024 545 2,067 -42 127 -1,522 -12.49% 5,261
August 13, 2024 587 1,940 64 140 -1,353 -5.95% 5,139
August 6, 2024 523 1,800 -93 -77 -1,277 -1.27% 4,966

Net Position (13 Weeks) - Non-Commercial

Change in Long and Short Positions (13 Weeks) - Non-Commercial

COT Interpretation for OATS

Comprehensive Guide to COT Reports for Agricultural Markets

Table of Contents

Introduction

The Commitment of Traders (COT) reports are particularly valuable for agricultural commodity markets, where a complex mix of producers, processors, speculators, and index funds creates unique market dynamics. This specialized guide focuses on applying COT analysis specifically to agricultural futures markets to gain trading and hedging advantages.

Agricultural markets present distinct characteristics in COT reports due to their seasonal production cycles, weather dependencies, global supply chain factors, and the essential nature of these commodities in the food supply chain. Understanding these nuances can provide significant analytical advantages.

Agricultural COT Reports: Key Characteristics

The CFTC provides specialized report formats that are particularly relevant for agricultural markets:

  1. Supplemental COT Report

    Created specifically for agricultural commodities to address the growing influence of index traders. This report separates index traders from the traditional commercial category, providing greater visibility into true commercial hedging versus passive long-only index investment.

  2. Disaggregated COT Report

    Particularly useful for agricultural markets as it separates:

    • Producer/Merchant/Processor/User: Actual agricultural industry participants
    • Swap Dealers: Often representing index exposure
    • Managed Money: Speculative funds and commodity trading advisors
    • Other Reportables: Other large traders
    • Non-Reportable Positions: Smaller traders
  3. Combined Futures and Options Report

    Important for agricultural markets where options strategies are frequently used by producers and processors for hedging.

Agricultural Markets Covered

The COT reports cover the following major agricultural futures markets:

Grains and Oilseeds

  • Corn (CBOT)
  • Soybeans (CBOT)
  • Wheat (CBOT, KCBT, MGEX)
  • Soybean Oil (CBOT)
  • Soybean Meal (CBOT)
  • Oats (CBOT)
  • Rough Rice (CBOT)
  • Canola (ICE)

Softs

  • Cotton (ICE)
  • Coffee (ICE)
  • Sugar (ICE)
  • Cocoa (ICE)
  • Orange Juice (ICE)

Livestock

  • Live Cattle (CME)
  • Feeder Cattle (CME)
  • Lean Hogs (CME)

Dairy

  • Class III Milk (CME)

Special Considerations for Agricultural Markets

  1. Seasonality

    Agricultural COT data must be interpreted within the context of seasonal production cycles:

    • Planting Seasons: Typically see increased hedging by producers
    • Growing Seasons: Weather concerns can drive speculative activity
    • Harvest Periods: Often see peak short hedging by producers
    • Storage Periods: Commercial positions shift from producers to processors and merchants
  2. USDA Reports Impact

    Major USDA reports cause significant position adjustments:

    • Prospective Plantings (March)
    • Acreage Report (June)
    • Crop Production Reports (Monthly)
    • WASDE Reports (Monthly)
    • Grain Stocks Reports (Quarterly)
  3. Weather Sensitivity

    Weather events can drive rapid position changes:

    • Drought conditions
    • Excessive rainfall
    • Early/late frosts
    • Global weather patterns (El Niño/La Niña)
  4. Global Production Cycles

    Unlike financial markets, agricultural markets must account for different hemispheric growing seasons:

    • North American harvest vs. South American harvest
    • Northern vs. Southern Hemisphere production windows

Understanding Trader Categories in Agricultural Markets

Producer/Merchant/Processor/User

Who they are: Farmers, grain elevators, food companies, feed manufacturers

Trading behavior:

  • Producers typically hedge by selling futures (short)
  • Processors typically hedge by buying futures (long)
  • Net position often reflects current point in seasonal cycle

Interpretation keys:

  • Increasing short positions ahead of harvest indicates producer hedging
  • Increasing long positions indicates processor price risk management
  • Extreme positions relative to seasonal norms may signal price turning points

Swap Dealers in Agricultural Markets

Who they are: Banks and dealers who provide commodity index exposure to clients

Trading behavior:

  • Predominantly long-biased due to index composition
  • Position changes often reflect fund flows rather than price views
  • Less responsive to short-term price movements

Interpretation keys:

  • Significant position changes may reflect institutional money flows
  • Generally less predictive for short-term price movements
  • Important for understanding overall market structure

Managed Money in Agricultural Markets

Who they are: Commodity Trading Advisors (CTAs), hedge funds, commodity pools

Trading behavior:

  • Typically trend-following
  • Responsive to technical signals and fundamental data
  • More volatile position changes than other categories

Interpretation keys:

  • Extreme positions often signal potential market turning points
  • Rapid position changes may precede significant price movements
  • Divergences between positions and price can be powerful signals

Seasonal Patterns in Agricultural COT Data

Corn

  • January-March: Processors often increase long positions
  • April-June: Producer short hedging increases with planting progress
  • July-August: Weather markets drive speculative positioning
  • September-November: Peak producer short hedging during harvest
  • December: Year-end position squaring

Soybeans

  • February-April: South American harvest impacts positioning
  • May-July: U.S. growing season uncertainty drives speculative activity
  • August-October: Producer hedging increases ahead of U.S. harvest
  • November-January: Processor buying often increases post-harvest

Wheat

  • March-May: Winter wheat condition reports impact positioning
  • June-August: Northern Hemisphere harvest creates heavy commercial short positioning
  • September-October: Planting intentions for new crop influence positions
  • November-February: Southern Hemisphere harvest impacts

Cotton

  • February-April: Planting intentions drive positioning
  • May-July: Growing season uncertainties
  • August-October: Harvest hedging peaks
  • November-January: Mill buying often increases

Live Cattle

Demonstrates less pronounced seasonality than crops

  • Feedlot placement cycles influence commercial hedging patterns
  • Seasonal demand patterns (grilling season, holidays) affect processor hedging

Index Fund Impact on Agricultural Markets

Understanding Index Involvement

  • Commodity indices like the S&P GSCI and Bloomberg Commodity Index maintain significant agricultural exposure
  • Index funds maintain predominantly long positions with periodic rebalancing
  • The Supplemental COT Report specifically identifies index trader positions

Key Considerations

  • Index positions tend to be less responsive to short-term price movements
  • "Roll periods" when indices shift positions between contract months can create temporary price pressure
  • Index participation has grown significantly since early 2000s, altering traditional market dynamics

How to Use Index Data

  • Major changes in index positions may signal institutional asset allocation shifts
  • Divergences between index positioning and price can identify potential opportunities
  • Understanding index roll schedules helps anticipate potential market impacts

Case Studies: Major Agricultural Markets

Corn Market

Commercial Positioning: Typically net short, with seasonal variation

Key COT Signals:

  • Commercials reducing short positions during price declines often precedes rallies
  • Managed Money net position extremes frequently coincide with price turning points
  • Commercial vs. Managed Money position gaps widening signals potential reversals

Soybean Market

Commercial Positioning: Varies greatly with global supply dynamics

Key COT Signals:

  • South American harvest periods create unique positioning patterns
  • Processor long positions increasing can signal anticipated demand strength
  • Spread positions between soybeans and products (meal, oil) provide crush margin insights

Live Cattle Market

Commercial Positioning: Processors often net short, feedlots net long

Key COT Signals:

  • Pack
  • Packer short coverage often precedes price rallies
  • Extreme speculative long positions frequently signal potential tops
  • Divergences between feeder and live cattle positioning provide spread opportunities

Trading Strategies for Agricultural Markets

  1. Harvest Pressure Strategy

    Setup: Monitor producer short hedging building before/during harvest

    Entry: Look for commercial short position peaks coinciding with price lows

    Exit: When commercial shorts begin covering and prices stabilize

    Markets: Particularly effective in grains and cotton

  2. Weather Premium Fade

    Setup: Identify extreme speculative positions during weather scares

    Entry: When managed money reaches historical position extremes

    Exit: As weather concerns normalize and positions revert

    Markets: Particularly effective in growing-season grain markets

  3. Commercial Signal Strategy

    Setup: Track commercial position changes relative to price

    Entry: When commercials significantly reduce net short positions during price declines

    Exit: When commercials begin increasing short positions again as prices rise

    Markets: Works across most agricultural commodities

  4. Processor Demand Strategy

    Setup: Monitor processor long positions for signs of anticipated demand

    Entry: When processor longs increase significantly during price weakness

    Exit: When prices rise to reflect the improved demand outlook

    Markets: Particularly effective in processing crops like soybeans, cotton, and cattle

  5. Commercial/Speculator Divergence Strategy

    Setup: Identify growing gaps between commercial and speculative positioning

    Entry: When the gap reaches historical extremes

    Exit: When the gap begins to narrow and price confirms

    Markets: Applicable across all agricultural markets

Combining COT Data with Fundamental Analysis

USDA Reports

  • Compare COT positioning changes before and after major USDA reports
  • Look for confirmation or divergence between report data and position adjustments
  • Monitor commercial reaction to reports for insight into industry interpretation

Crop Progress and Condition

  • Weekly crop condition reports often drive speculative positioning
  • Commercial reaction to condition changes can provide valuable trading signals
  • Divergences between conditions and positioning may identify mispriced markets

Global Supply and Demand Factors

  • International crop production changes drive positioning in globally traded markets
  • Export sales reports influence commercial hedging activities
  • Currency movements impact relative positioning in internationally traded commodities

Integrating Seasonal Fundamentals

  • Compare current positioning to historical seasonal patterns
  • Identify when positions are abnormal for the current point in the season
  • Use seasonal tendencies to anticipate upcoming position changes

Common Pitfalls and How to Avoid Them

  1. Ignoring Seasonality

    Pitfall: Interpreting position levels without seasonal context

    Solution: Always compare current positions to historical seasonal norms

    Example: Producer short positions naturally increase during harvest, not necessarily bearish

  2. Overlooking Contract Roll Impacts

    Pitfall: Misinterpreting position changes during index roll periods

    Solution: Be aware of standard roll schedules for major indices

    Example: Apparent commercial selling during roll periods may be temporary technical flows

  3. Misunderstanding Report Categories

    Pitfall: Not recognizing the nuances between different COT report formats

    Solution: Use the Supplemental and Disaggregated reports for better clarity

    Example: Index fund positions in Legacy reports can distort true commercial hedger activity

  4. Reacting to Single-Week Changes

    Pitfall: Overemphasizing one week's position changes

    Solution: Focus on multi-week trends and significant position changes

    Example: Weather-driven temporary position adjustments vs. fundamental trend changes

  5. Neglecting Spread Positions

    Pitfall: Focusing only on outright positions, missing spread implications

    Solution: Monitor spreading activity, especially in related markets

    Example: Soybean/corn spread positions can provide insight into acreage competition

Resources for Agricultural COT Analysis

Specialized Data Services

  • AgResource Company: Provides COT analysis specific to agricultural markets
  • Hightower Report: Offers regular COT commentary for agricultural commodities
  • Brugler Marketing: Features agricultural-focused COT interpretation

Software Tools

  • Commodity Research Bureau (CRB): Offers historical COT data visualization for agricultural markets
  • DTN ProphetX: Includes agricultural COT analysis tools
  • AgriCharts: Provides specialized agricultural market data including COT information

Educational Resources

  • Agricultural Extension Services: Many offer educational materials on hedging and market analysis
  • CME Group: Provides educational content specific to agricultural markets
  • ICE Exchange: Offers resources for soft commodity trading and analysis

Government Resources

  • USDA ERS (Economic Research Service): Provides contextual market analysis
  • CFTC Agricultural Advisory Committee: Publishes recommendations and analysis
  • USDA AMS (Agricultural Marketing Service): Offers complementary market data

© 2025 - This guide is for educational purposes only and does not constitute financial advice. Agricultural markets involve significant risk, and positions should be managed according to individual risk tolerance and objectives.

Market Neutral (Overbought)
Based on the latest 13 weeks of non-commercial positioning data.
📊 COT Sentiment Analysis Guide

This guide helps traders understand how to interpret Commitments of Traders (COT) reports to generate potential Buy, Sell, or Neutral signals using market positioning data.

🧠 How It Works
  • Recent Trend Detection: Tracks net position and rate of change (ROC) over the last 13 weeks.
  • Overbought/Oversold Check: Compares current net positions to a 1-year range using percentiles.
  • Strength Confirmation: Validates if long or short positions are dominant enough for a signal.
✅ Signal Criteria
Condition Signal
Net ↑ for 13+ weeks AND ROC ↑ for 13+ weeks AND strong long dominance Buy
Net ↓ for 13+ weeks AND ROC ↓ for 13+ weeks AND strong short dominance Sell
Net in top 20% of 1-year range AND net uptrend ≥ 3 Neutral (Overbought)
Net in bottom 20% of 1-year range AND net downtrend ≥ 3 Neutral (Oversold)
None of the above conditions met Neutral
🧭 Trader Tips
  • Trend traders: Follow Buy/Sell signals when all trend and strength conditions align.
  • Contrarian traders: Use Neutral (Overbought/Oversold) flags to anticipate reversals.
  • Swing traders: Use sentiment as a filter to increase trade confidence.
Example:
Net positions rising, strong long dominance, in top 20% of historical range.
Result: Neutral (Overbought) — uptrend may be too crowded.
  • COT data is delayed (released on Friday, based on Tuesday's positions) - it's not real-time.
  • Combine with price action, FVG, liquidity, or technical indicators for best results.
  • Use percentile filters to avoid buying at extreme highs or selling at extreme lows.

Trading Strategy for Oats Based on the COT Report (Retail Trader/Market Investor)

This strategy leverages the Commitments of Traders (COT) report to understand the positioning of different trader groups in the Oats market and make informed trading decisions. It's designed for retail traders and market investors, incorporating risk management and a medium-term perspective.

I. Understanding the COT Report for Oats

  • What is the COT Report? The COT report, published by the Commodity Futures Trading Commission (CFTC), breaks down the open interest (total number of outstanding futures and options contracts) in the Oats market by different trader categories.

  • Key Trader Categories:

    • Commercials (Hedgers): These are businesses involved in the physical production, processing, or distribution of Oats. They use futures to hedge against price risk. Their positions are typically opposite to their cash market exposure (e.g., a farmer expecting to sell Oats in the future will short Oats futures to lock in a price). Monitor their Net Position (Long - Short). Decreasing net shorts or increasing net longs suggests bullishness in the hedger community.
    • Non-Commercials (Large Speculators): These are large institutional investors, hedge funds, and other entities who trade for profit, not for physical delivery. They are generally trend-following. Monitor their Net Position (Long - Short). Increasing net longs or decreasing net shorts suggests bullishness.
    • Small Speculators: This category encompasses smaller retail traders and investors. Their positions are often considered noise in the market, and are typically used in conjunction with other indicators.

  • Report Variations: There are different versions of the COT report (e.g., Legacy, Disaggregated, TFF). The Disaggregated and TFF reports offer more detailed breakdowns, which can be helpful, but the Legacy report is a good starting point. This report is separated as follows

    • Producers
    • Money Managers
    • Swap Dealers
    • Other Reportables

  • Important Metrics:

    • Net Position: The difference between long and short positions for each group. This is the most crucial data point.
    • Changes in Net Position: The week-over-week change in net positions reveals shifting sentiment.
    • Open Interest: The total number of outstanding contracts. Increasing open interest during a price move validates the trend.

II. Core Trading Strategy

This strategy focuses on identifying trends supported by Commercials and Non-Commercials:

  1. Identify the Primary Trend:

    • Technical Analysis: Start by analyzing the Oats price chart (daily or weekly timeframe) to determine the overall trend. Use moving averages (e.g., 50-day and 200-day), trendlines, and chart patterns to identify bullish or bearish market conditions.

  2. COT Report Confirmation:

    • Bullish Scenario:
      • Price is in an uptrend (based on technical analysis).
      • Commercials are decreasing their net short positions (or increasing their net long positions). This indicates they are becoming less bearish or more bullish, suggesting they expect prices to rise.
      • Non-Commercials are increasing their net long positions (or decreasing their net short positions). This confirms the bullish sentiment from large speculators.
    • Bearish Scenario:
      • Price is in a downtrend (based on technical analysis).
      • Commercials are increasing their net short positions (or decreasing their net long positions). This indicates they are becoming more bearish, suggesting they expect prices to fall.
      • Non-Commercials are increasing their net short positions (or decreasing their net long positions). This confirms the bearish sentiment from large speculators.

  3. Entry Signals:

    • Trend Continuation: Look for pullbacks within the prevailing trend on the price chart. Use technical indicators like Fibonacci retracements, support/resistance levels, or candlestick patterns (e.g., bullish engulfing, hammer) to identify potential entry points.
    • COT Extreme Readings (Caution): Extremely high net long positions by Non-Commercials (or extremely low net short positions by Commercials) can sometimes indicate an overbought market ripe for a correction. Conversely, extremely high net short positions by Non-Commercials (or extremely low net long positions by Commercials) can suggest an oversold market. Use with caution and confirm with technical analysis. Don't blindly fade extremes; look for other confirming factors.

  4. Stop-Loss Placement:

    • Risk Management is Paramount! Always use stop-loss orders to limit potential losses.
    • Placement: Place your stop-loss order below a recent swing low (for long positions) or above a recent swing high (for short positions). Consider using a multiple of your Average True Range (ATR) for stop-loss placement.

  5. Profit Targets:

    • Trend-Following: Aim to capture a significant portion of the prevailing trend. Use Fibonacci extensions, trendlines, or previous resistance levels (for long positions) and support levels (for short positions) to identify potential profit targets.
    • Risk-Reward Ratio: Strive for a minimum risk-reward ratio of 1:2 or 1:3. This means your potential profit should be at least twice or three times the amount you're risking.

  6. Position Sizing:

    • Risk Only a Small Percentage: Never risk more than 1-2% of your trading capital on any single trade. Calculate your position size based on your risk tolerance, the distance of your stop-loss order, and the contract value.

  7. Monitoring and Adjustment:

    • Regular COT Review: Review the COT report weekly to monitor changes in trader positioning.
    • Trailing Stop-Loss: As the trade moves in your favor, consider using a trailing stop-loss order to lock in profits and protect against potential reversals.
    • Adjust Profit Targets: Based on market conditions and the strength of the trend, you may need to adjust your profit targets.

III. Advanced Considerations

  • Spreads: Analyze the spread relationship between different Oats contracts. Changes in spread relationships can provide insights into supply and demand dynamics.
  • Seasonality: Oats prices often exhibit seasonal patterns related to planting and harvest cycles. Combine COT analysis with seasonal trends.
  • Macroeconomic Factors: Monitor macroeconomic factors such as weather patterns (droughts, floods), agricultural policies, and currency fluctuations, as these can impact Oats prices.
  • Grain Complex Correlation: Understand the relationship of Oats prices in comparison to Corn and Wheat.

IV. Example Scenario

  1. Technical Analysis: The Oats price has been trending upwards for several months, breaking above a key resistance level.
  2. COT Report:
    • Commercials: Net short positions have been steadily decreasing over the past few weeks.
    • Non-Commercials: Net long positions have been consistently increasing.
  3. Entry: The price pulls back to a support level coinciding with a 50% Fibonacci retracement. A bullish engulfing candlestick pattern forms.
  4. Stop-Loss: Placed below the swing low of the pullback.
  5. Profit Target: Set at a previous resistance level based on a Fibonacci extension, aiming for a 1:3 risk-reward ratio.
  6. Monitoring: Continuously monitor the COT report and the price action. Adjust the stop-loss and profit target as needed.

V. Risk Management

  • Leverage: Be cautious with leverage. It can amplify both profits and losses. Start with low leverage and gradually increase it as you gain experience.
  • Diversification: Don't put all your eggs in one basket. Diversify your trading portfolio across different asset classes and commodities.
  • Education: Continuously educate yourself about the Oats market, technical analysis, and COT report analysis.
  • Emotional Control: Avoid making impulsive trading decisions based on fear or greed. Stick to your trading plan.

VI. Disclaimer

This trading strategy is for educational purposes only and should not be considered financial advice. Trading commodities involves substantial risk of loss. You should carefully consider your investment objectives, risk tolerance, and financial situation before trading. Past performance is not indicative of future results.