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

Rough Rice (Non-Commercial)

13-Wk Max 2,660 7,255 336 1,633 -3,132
13-Wk Min 2,119 5,475 -252 -1,052 -4,771
13-Wk Avg 2,347 6,397 8 219 -4,050
Report Date Long Short Change Long Change Short Net Position Rate of Change (ROC) ℹ️ Open Int.
April 29, 2025 2,455 6,683 336 792 -4,228 -12.09% 11,918
April 22, 2025 2,119 5,891 -113 -312 -3,772 5.01% 12,021
April 15, 2025 2,232 6,203 -252 -1,052 -3,971 16.77% 12,196
April 8, 2025 2,484 7,255 -110 246 -4,771 -8.06% 13,106
April 1, 2025 2,594 7,009 -66 316 -4,415 -9.47% 12,826
March 25, 2025 2,660 6,693 262 463 -4,033 -5.25% 12,283
March 18, 2025 2,398 6,230 270 -13 -3,832 6.88% 12,406
March 11, 2025 2,128 6,243 -24 -583 -4,115 11.96% 12,169
March 4, 2025 2,152 6,826 -21 589 -4,674 -15.01% 12,663
February 25, 2025 2,173 6,237 -137 302 -4,064 -12.11% 12,848
February 18, 2025 2,310 5,935 -149 -545 -3,625 9.85% 12,558
February 11, 2025 2,459 6,480 116 1,005 -4,021 -28.38% 13,165
February 4, 2025 2,343 5,475 -14 1,633 -3,132 -110.91% 12,046

Net Position (13 Weeks) - Non-Commercial

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

COT Interpretation for RICE

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 (Oversold)
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.

Okay, let's develop a comprehensive trading strategy for Rough Rice futures based on the Commitments of Traders (COT) report, tailored for retail traders and market investors.

Important Disclaimer: Trading futures involves substantial risk of loss and is not suitable for all investors. This is for educational purposes only and should not be considered financial advice. Always consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results.

I. Understanding the COT Report for Rough Rice

The COT report is a weekly snapshot of positions held by various market participants in the futures market. It categorizes traders into three main groups:

  • Commercials (Hedgers): These are entities directly involved in the production, processing, or merchandising of Rough Rice (e.g., rice farmers, millers, exporters). They use futures to hedge against price fluctuations of the physical commodity. Commercials are generally considered to be the most informed traders in the market, as they have the most intimate understanding of the supply and demand fundamentals.
  • Large Speculators (Managed Money): These are primarily institutional investors, such as hedge funds, commodity trading advisors (CTAs), and other professional money managers. They trade futures for profit and often use trend-following or other systematic trading strategies.
  • Small Speculators (Retail): This category includes smaller traders and individual investors who trade futures for speculative purposes. This group is generally less informed than the other two.

What to Look For in the COT Report:

  • Net Positions: The COT report shows the net positions (long positions minus short positions) of each trader category. A positive net position indicates that a group is overall bullish, while a negative net position indicates bearishness.
  • Changes in Positions: Pay attention to how net positions are changing over time. Significant increases or decreases in a particular group's net position can signal a shift in market sentiment.
  • Extreme Readings: Extreme net positions (either very long or very short) can indicate potential overbought or oversold conditions, which could lead to a price reversal.
  • Divergences: Look for situations where the price of Rough Rice is moving in one direction while the net positions of the Commercials or Large Speculators are moving in the opposite direction. This can be a warning sign that the current price trend is unsustainable.

II. Key COT-Based Trading Strategies for Rough Rice

Here are several trading strategies that retail traders and market investors can use, based on the COT report:

1. Commercial Hedger Following:

  • Concept: This is based on the belief that Commercials are the "smart money" and that following their lead can be profitable.
  • Strategy:
    • Identify Trends: Look for sustained trends in the net positions of Commercials. If they are consistently increasing their net long positions, it suggests they believe prices will rise. Conversely, if they are increasing their net short positions, it suggests they believe prices will fall.
    • Entry Points: Consider entering long positions when Commercials are significantly increasing their net long positions after a period of decline. Conversely, consider entering short positions when Commercials are significantly increasing their net short positions after a period of increase.
    • Confirmation: Look for confirmation from price action and other technical indicators (e.g., moving averages, trendlines, oscillators) before entering a trade.
    • Stop-Loss Orders: Place stop-loss orders to limit potential losses if the market moves against your position. A typical stop loss is just below a recent swing low (for long positions) or just above a recent swing high (for short positions).
    • Profit Targets: Set profit targets based on technical levels or a multiple of your initial risk (e.g., a 2:1 or 3:1 risk-reward ratio).

2. Large Speculator Trend Following with Commercial Confirmation:

  • Concept: Combine the trend-following tendencies of Large Speculators with the hedging wisdom of Commercials.
  • Strategy:
    • Identify Large Speculator Trends: Determine the prevailing trend in Large Speculator net positions. Are they consistently net long or net short, and is that position increasing or decreasing?
    • Commercial Confirmation: Look for confirmation from the Commercials. Do their positions align with the Large Speculators (e.g., both are net long and increasing their longs)? Stronger signals occur when Commercials disagree with the trend. If Large Speculators are long and Commercials are shortening their short positions, this confirms the trend.
    • Entry Points: Enter in the direction of the Large Speculator trend, but only if Commercials are not aggressively opposing that trend. If Large Speculators are long and Commercials are hedging more aggressively (adding to their shorts), be cautious.
    • Risk Management: Use appropriate stop-loss orders and position sizing to manage risk.
    • Exit Strategy: Take profits when the Large Speculator trend shows signs of weakening or when Commercials start to strongly oppose the trend.

3. COT Extremes and Reversals:

  • Concept: This strategy capitalizes on the tendency for markets to reverse after reaching extreme levels of bullish or bearish sentiment.
  • Strategy:
    • Identify Extreme Readings: Determine historical ranges for the net positions of Commercials and Large Speculators. What constitutes an "extreme" long or short position? Look for readings that are significantly outside of these historical ranges.
    • Confirmation: Look for confirmation from price action and other technical indicators. For example, if Commercials are at an extreme net short position (very bearish), look for a bullish reversal pattern on the price chart.
    • Entry Points: Enter counter-trend positions (e.g., go long if Commercials are extremely short and the price shows signs of bottoming).
    • Stop-Loss Orders: Place stop-loss orders below recent swing lows (for long positions) or above recent swing highs (for short positions).
    • Profit Targets: Set profit targets based on technical levels or a percentage of the expected price movement.
    • Caution: Be cautious when trading against strong trends. Extreme COT readings can persist for extended periods.

4. Divergence Trading:

  • Concept: A divergence occurs when the price of Rough Rice is moving in one direction while the net positions of Commercials or Large Speculators are moving in the opposite direction. This can signal a potential change in the current trend.
  • Strategy:
    • Identify Divergences: Look for instances where the price of Rough Rice is making new highs or lows, while the net positions of Commercials or Large Speculators are not confirming those moves.
      • Example: The price of Rough Rice is making new highs, but Commercials are reducing their net short positions (becoming less bearish) or even starting to accumulate long positions. This could be a bearish divergence.
      • Example: The price of Rough Rice is making new lows, but Commercials are reducing their net long positions (becoming less bullish) or even starting to accumulate short positions. This could be a bullish divergence.
    • Confirmation: Wait for confirmation from price action, such as a break of a trendline or a reversal pattern.
    • Entry Points: Enter a trade in the direction of the expected reversal after confirmation.
    • Stop-Loss Orders: Place stop-loss orders to limit potential losses.
    • Profit Targets: Set profit targets based on technical levels or a percentage of the expected price movement.

III. Additional Considerations and Risk Management

  • Fundamental Analysis: The COT report provides valuable insights into market sentiment, but it should not be used in isolation. Combine it with fundamental analysis of supply and demand factors in the Rough Rice market (e.g., weather conditions, planting and harvesting reports, global trade flows).
  • Technical Analysis: Use technical analysis to identify entry and exit points, set stop-loss orders, and determine profit targets.
  • Position Sizing: Carefully manage your position size to limit potential losses. Don't risk more than a small percentage of your trading capital on any single trade (e.g., 1-2%).
  • Diversification: Don't put all your eggs in one basket. Diversify your portfolio across different asset classes and commodities.
  • Volatility: Rough Rice futures can be volatile. Be prepared for price swings and adjust your trading strategy accordingly.
  • Brokerage Fees and Margin Requirements: Factor in brokerage fees and margin requirements when calculating potential profits and losses.
  • Stay Updated: The COT report is released every Friday afternoon (for the previous Tuesday's data). Stay informed about the latest COT data and market developments.
  • Backtesting: Before trading any strategy live, backtest it on historical data to assess its potential profitability and risk.
  • Paper Trading: Practice trading your strategy in a simulated environment (paper trading) before risking real money.
  • Emotional Control: Trading can be emotionally challenging. Develop a disciplined approach and avoid making impulsive decisions.

IV. Example Scenario

Let's say you are analyzing the COT report for Rough Rice, and you notice the following:

  • Price: Rough Rice prices have been trending upwards for the past few weeks.
  • Commercials: Commercials have been steadily increasing their net short positions (hedging against further price increases).
  • Large Speculators: Large Speculators have been increasing their net long positions (riding the upward trend).
  • COT Extreme Reading: The Small Speculators' short positions are at a historically low level.

Possible Interpretation:

  • The Commercials are becoming increasingly bearish, suggesting that they believe the current price rally is unsustainable.
  • The Large Speculators are fueling the upward trend, but their optimism may be misplaced.
  • Small Speculators are overbearish, increasing the possibility for a short squeeze.

Potential Trading Strategy:

  • Wait for Confirmation: Look for a bearish reversal pattern on the price chart (e.g., a double top, a head and shoulders pattern).
  • Entry Point: Enter a short position after the bearish reversal pattern is confirmed.
  • Stop-Loss Order: Place a stop-loss order above the recent swing high.
  • Profit Target: Set a profit target based on a technical level or a multiple of your initial risk.

V. Resources

By carefully analyzing the COT report, combining it with other forms of analysis, and managing risk effectively, retail traders and market investors can potentially improve their trading performance in the Rough Rice futures market. Remember, consistency and patience are key to success in trading. Good luck!