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

USD Malaysian Crude Palm Oil C (Non-Commercial)

13-Wk Max 2,571 7,391 737 3,500 831
13-Wk Min 1,568 1,632 -1,640 -2,240 -5,255
13-Wk Avg 2,005 3,937 -101 -72 -1,932
Report Date Long Short Change Long Change Short Net Position Rate of Change (ROC) ℹ️ Open Int.
April 29, 2025 2,571 1,740 737 108 831 311.39% 17,766
April 22, 2025 1,834 1,632 140 -350 202 170.14% 16,256
April 15, 2025 1,694 1,982 100 -2,240 -288 89.04% 13,572
April 8, 2025 1,594 4,222 -680 -1,260 -2,628 18.08% 15,342
April 1, 2025 2,274 5,482 -2 -209 -3,208 6.06% 15,952
March 25, 2025 2,276 5,691 80 -1,560 -3,415 32.44% 20,439
March 18, 2025 2,196 7,251 60 -140 -5,055 3.81% 20,981
March 11, 2025 2,136 7,391 -80 3,500 -5,255 -213.73% 19,789
March 4, 2025 2,216 3,891 558 100 -1,675 21.47% 17,839
February 25, 2025 1,658 3,791 90 150 -2,133 -2.89% 21,436
February 18, 2025 1,568 3,641 -236 1,220 -2,073 -235.98% 20,896
February 11, 2025 1,804 2,421 -440 381 -617 -402.45% 19,719
February 4, 2025 2,244 2,040 -1,640 -630 204 -83.20% 20,320

Net Position (13 Weeks) - Non-Commercial

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

COT Interpretation for PALM OIL

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 USD Malaysian Crude Palm Oil C (CME) Based on COT Report Analysis (For Retail Traders and Market Investors)

This strategy outlines how retail traders and market investors can utilize the Commitments of Traders (COT) report to inform their trading decisions on USD Malaysian Crude Palm Oil C (CME).

I. Understanding the Fundamentals:

Before diving into COT report analysis, it's crucial to understand the fundamentals driving Palm Oil prices:

  • Supply-Side Factors:
    • Production: Malaysia and Indonesia account for the vast majority of global Palm Oil production. Factors like weather patterns (El Nino/La Nina), disease outbreaks, and government policies (e.g., export restrictions, replanting schemes) heavily influence supply.
    • Yields: Improvements in planting technology and farm management practices can impact yields and overall supply.
  • Demand-Side Factors:
    • Global Consumption: Palm Oil is used extensively in food products, cosmetics, and biofuel. Demand is driven by population growth, economic growth in developing countries, and policies promoting biofuel usage.
    • Substitution: Palm Oil competes with other vegetable oils (soybean oil, rapeseed oil, sunflower oil). Price differentials and availability can influence substitution between these oils.
    • Import/Export Policies: Import tariffs and export restrictions by key consuming countries can significantly impact demand.
  • Other Factors:
    • Currency Fluctuations: Changes in the Malaysian Ringgit (MYR) and US Dollar (USD) exchange rate can affect Palm Oil prices.
    • Crude Oil Prices: Palm Oil is a feedstock for biodiesel production, so crude oil prices can influence demand.
    • Geopolitical Events: Political instability in producing regions can disrupt supply.
    • Speculation: Hedging and speculation by commodity funds and other market participants can contribute to price volatility.

II. Understanding the COT Report:

The COT report, released weekly by the CFTC, provides a breakdown of open interest in futures and options markets by category of trader. For the USD Malaysian Crude Palm Oil C contract, focus on these key categories:

  • Commercials (Hedgers): These are entities directly involved in the production, processing, or consumption of Palm Oil. They use futures contracts primarily to hedge against price risk. Pay close attention to the Net Positions of Processors/Users.
  • Non-Commercials (Speculators): These are large speculators, including hedge funds and commodity trading advisors (CTAs), who trade futures contracts to profit from price movements. Pay attention to their Net Long and Short positions.
  • Non-Reportable Positions: These are smaller traders whose positions are not large enough to be reported individually. This group often represents retail traders and small market participants.

III. Key COT Report Indicators and Trading Strategies:

Here's how to interpret the COT report and translate it into actionable trading strategies:

A. Identifying Trend Changes:

  • Large Speculators (Non-Commercials) - Trend Followers: The COT report can help identify potential trend changes by tracking the net positions of Large Speculators.
    • Bullish Signal: If Large Speculators are increasing their net long positions (or decreasing their net short positions), it suggests they are becoming more bullish and anticipating higher prices. Consider entering long positions or covering short positions.
    • Bearish Signal: If Large Speculators are decreasing their net long positions (or increasing their net short positions), it suggests they are becoming more bearish and anticipating lower prices. Consider entering short positions or liquidating long positions.
  • Extreme Net Positions: Look for periods where Large Speculators' net positions reach historical extremes (either long or short). These extremes often signal potential trend reversals.
    • Example: If Large Speculators have a historically large net long position and the price has been trending upwards, this could be a sign that the market is overbought and a correction is likely.

B. Confirming Trends:

  • Commercials (Hedgers) - "Smart Money": Commercials are often considered the "smart money" because they have the best information about the physical Palm Oil market.
    • Bullish Confirmation: If Large Speculators are increasing their net long positions and Commercials are decreasing their net short positions (hedging less), it provides stronger confirmation of an upward trend.
    • Bearish Confirmation: If Large Speculators are increasing their net short positions and Commercials are increasing their net short positions (hedging more), it provides stronger confirmation of a downward trend.
  • Divergence: Pay attention to situations where the price action diverges from the COT report data.
    • Example: If the price is rising but Large Speculators are decreasing their net long positions, it could be a sign that the rally is unsustainable and a correction is likely.

C. Trading Strategies Based on COT Data:

Here are a few potential trading strategies based on COT report analysis:

  1. Trend-Following with COT Confirmation:

    • Entry: Enter long positions when the price is trending upwards, Large Speculators are increasing their net long positions, and Commercials are decreasing their net short positions. Enter short positions when the price is trending downwards, Large Speculators are increasing their net short positions, and Commercials are increasing their net short positions.
    • Stop-Loss: Place stop-loss orders below recent swing lows for long positions and above recent swing highs for short positions.
    • Profit Target: Set profit targets based on technical analysis (e.g., Fibonacci extensions, trendlines) or fundamental analysis (e.g., expected supply/demand balance).

  2. Contrarian Trading at Extremes:

    • Entry: Enter short positions when Large Speculators have a historically large net long position and the price is overbought (based on technical indicators). Enter long positions when Large Speculators have a historically large net short position and the price is oversold (based on technical indicators).
    • Stop-Loss: Place stop-loss orders above recent swing highs for short positions and below recent swing lows for long positions.
    • Profit Target: Set profit targets based on technical analysis or fundamental analysis. Be prepared to take profits quickly, as these trades are based on short-term reversals.

  3. Hedging Based on Commercial Activity:

    • If you are involved in the physical Palm Oil market (e.g., as a processor or user): Use the COT report to understand how Commercials are hedging their positions. If Commercials are aggressively hedging (increasing their net short positions), it may be a sign that they expect prices to decline, and you should consider hedging your own exposure accordingly.

IV. Risk Management:

  • Position Sizing: Never risk more than a small percentage (e.g., 1-2%) of your trading capital on any single trade.
  • Stop-Loss Orders: Always use stop-loss orders to limit potential losses.
  • Diversification: Don't put all your eggs in one basket. Diversify your portfolio across different commodities and asset classes.
  • Understand Margin Requirements: Be aware of the margin requirements for trading Palm Oil futures and manage your leverage accordingly.
  • Stay Informed: Keep up-to-date on the latest fundamental developments in the Palm Oil market and regularly review the COT report.

V. Important Considerations:

  • Lagging Indicator: The COT report is a lagging indicator. It reflects positions taken in the past, not necessarily current market sentiment.
  • Market Volatility: The Palm Oil market can be highly volatile. Be prepared for rapid price swings.
  • Correlation is Not Causation: The COT report can provide valuable insights, but it is not a guaranteed predictor of future price movements. Correlations between COT data and price movements may not be causal.
  • Combination with Other Analysis: The COT report should be used in conjunction with other forms of analysis, including technical analysis, fundamental analysis, and sentiment analysis.
  • Brokerage: Choose a reputable brokerage that provides access to futures markets and offers reliable trading platforms. Ensure you understand their fees and margin requirements.
  • Education: Continuously educate yourself about futures trading, COT report analysis, and the Palm Oil market.

VI. Example Scenario:

Let's say the current price of USD Malaysian Crude Palm Oil C is $800/metric ton. You analyze the latest COT report and see that:

  • Large Speculators (Non-Commercials) have been aggressively increasing their net long positions for the past several weeks. Their current net long position is at a historical high.
  • The price has been trending upwards.
  • However, Commercials (Hedgers) have started to increase their net short positions in the most recent week.

Interpretation:

The increasing net long positions of Large Speculators suggest that the market is bullish. However, the fact that Commercials are starting to hedge more heavily suggests that they may believe the price is overvalued and a correction is possible. The historically high net long position of Large Speculators could also indicate that the market is overbought.

Trading Strategy:

Given this scenario, a more conservative approach might be to:

  1. Avoid initiating new long positions: The market may be overextended.
  2. Consider taking profits on existing long positions: Reduce your exposure to the market.
  3. Watch for signs of a reversal: Look for bearish candlestick patterns, a breakdown of key support levels, or negative news impacting the Palm Oil market.
  4. If a reversal occurs, consider entering short positions with a tight stop-loss above a recent swing high: Take advantage of a potential correction.

Conclusion:

The COT report is a valuable tool for retail traders and market investors looking to gain an edge in the USD Malaysian Crude Palm Oil C market. However, it is important to understand the report's limitations and use it in conjunction with other forms of analysis and a robust risk management strategy. Remember to stay informed, be patient, and trade responsibly.