Back to COT Dashboard
Market Sentiment
Neutral
Based on the latest 13 weeks of non-commercial positioning data. ℹ️

CME MILK IV (Non-Commercial)

13-Wk Max 440 1,337 79 199 -545
13-Wk Min 336 913 -102 -257 -931
13-Wk Avg 382 1,144 2 0 -762
Report Date Long Short Change Long Change Short Net Position Rate of Change (ROC) ℹ️ Open Int.
April 29, 2025 368 913 7 -45 -545 8.71% 7,903
April 22, 2025 361 958 21 -87 -597 15.32% 7,787
April 15, 2025 340 1,045 4 -12 -705 2.22% 7,337
April 8, 2025 336 1,057 -102 -257 -721 17.69% 7,174
April 1, 2025 438 1,314 0 -23 -876 2.56% 8,189
March 25, 2025 438 1,337 -2 34 -899 -4.17% 7,880
March 18, 2025 440 1,303 79 118 -863 -4.73% 7,858
March 11, 2025 361 1,185 -40 -147 -824 11.49% 7,654
March 4, 2025 401 1,332 11 71 -931 -6.89% 8,459
February 25, 2025 390 1,261 26 199 -871 -24.79% 8,315
February 18, 2025 364 1,062 25 36 -698 -1.60% 8,113
February 11, 2025 339 1,026 -47 -48 -687 0.15% 7,982
February 4, 2025 386 1,074 49 157 -688 -18.62% 8,863

Net Position (13 Weeks) - Non-Commercial

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

COT Interpretation for MILK

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
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: CME Milk IV Futures Based on COT Report Analysis

This strategy outlines how retail traders and market investors can utilize the CFTC Commitment of Traders (COT) report to inform trading decisions in CME Milk IV (Class IV Milk Futures) contracts. This strategy incorporates fundamental understanding of the milk market, technical analysis, and risk management.

I. Understanding the Basics:

  • Commodity: Class IV Milk (used primarily for manufacturing dairy products like butter and nonfat dry milk).
  • Contract Size: 200,000 pounds.
  • Exchange: Chicago Mercantile Exchange (CME).
  • CFTC Market Code: CME
  • Tick Size and Value: Familiarize yourself with the tick size and its corresponding dollar value for accurate profit/loss calculations.
  • Margin Requirements: Understand the initial and maintenance margin requirements for trading Milk IV futures. These requirements fluctuate, so stay updated.
  • Expiration Dates: Know the contract months and expiration dates.
  • Fundamental Factors Influencing Milk Prices:
    • Milk Production: Seasonality, weather patterns affecting pasture conditions, feed costs, and farm profitability.
    • Demand: Domestic and international demand for dairy products (butter, nonfat dry milk, cheese). Export demand is crucial.
    • Government Policies: Dairy policies, price supports, and export subsidies.
    • Inventory Levels: Dairy product storage volumes.
    • Input Costs: Feed costs (corn, soybeans), energy prices, and labor costs.
    • Global Economic Conditions: Impacts on consumer spending and international trade.

II. The Commitment of Traders (COT) Report:

The COT report is a weekly publication by the CFTC that breaks down the open interest in futures markets by different trader categories. We'll focus primarily on the Legacy COT report, which classifies traders into three key categories:

  • Commercials (Hedgers): Processors, cooperatives, and other entities that use futures to hedge their exposure to price fluctuations in the physical milk market. They are considered "informed" traders.
  • Large Speculators (Managed Money): Hedge funds, commodity trading advisors (CTAs), and other institutional investors trading for profit. They typically follow trends.
  • Small Speculators (Retail): Small traders who use futures for speculative purposes. Their positions are generally considered less informed and often lag the market.

Key Data Points in the COT Report:

  • Net Positions: The difference between long and short positions held by each trader category. A positive net position indicates a net long stance, while a negative net position indicates a net short stance.
  • Changes in Positions: The week-over-week change in net positions, revealing shifts in sentiment.
  • Open Interest: The total number of outstanding futures contracts. Changes in open interest can confirm or contradict price trends.

III. Trading Strategy Based on COT Data:

A. General Principles:

  • Follow the Commercials: The general principle is to align your trading strategy with the actions of Commercials (Hedgers) as they possess superior knowledge of the underlying physical milk market.
  • Confirm with Open Interest: Changes in open interest should confirm price trends. Increasing open interest with rising prices (or falling prices) suggests the trend is likely to continue. Decreasing open interest with rising prices (or falling prices) suggests the trend may be weakening.
  • Monitor Large Speculators: Large Speculators (Managed Money) often contribute to trend continuation, but they can also be prone to overreaction. Pay attention to their positions relative to Commercials.
  • Be Cautious with Small Speculators: While not always wrong, retail traders often follow trends and are more likely to be on the wrong side of the market at key turning points.

B. Specific Trading Scenarios and Actions:

  1. Commercials Accumulating Longs and Decreasing Shorts:

    • Scenario: Commercials are significantly increasing their net long positions (buying futures or covering shorts) as milk prices decline or remain stagnant. This suggests they believe milk prices are undervalued and expect them to rise.
    • Action: Consider taking a long position in Milk IV futures, especially if confirmed by increasing open interest. Look for bullish candlestick patterns or technical breakouts as confirmation.
    • Stop-Loss Placement: Place a stop-loss order below a recent swing low or a significant support level.

  2. Commercials Accumulating Shorts and Decreasing Longs:

    • Scenario: Commercials are significantly increasing their net short positions (selling futures or covering longs) as milk prices rise or remain stagnant. This suggests they believe milk prices are overvalued and expect them to fall.
    • Action: Consider taking a short position in Milk IV futures, especially if confirmed by increasing open interest. Look for bearish candlestick patterns or technical breakdowns as confirmation.
    • Stop-Loss Placement: Place a stop-loss order above a recent swing high or a significant resistance level.

  3. Divergence Between Commercials and Large Speculators:

    • Scenario: Commercials are increasing their net long positions while Large Speculators are increasing their net short positions (or vice versa). This divergence can signal a potential trend reversal. Pay close attention to which group is taking the more extreme position. Commercials' positions are generally more reliable.
    • Action: Exercise caution and wait for further confirmation from price action and other technical indicators. If Commercials are taking a strong counter-trend position, consider fading the current trend.
    • Risk Management: Reduce position size and use wider stop-loss orders.

  4. Extreme Positioning:

    • Scenario: Commercials reach extreme net long or net short positions relative to their historical averages. This suggests they are either heavily hedging against potential price changes or are anticipating a significant shift in the market.
    • Action: Be aware that extreme positioning can indicate a market nearing a top or bottom. However, it's not a guaranteed signal. Look for confirmation from price action, technical indicators, and fundamental analysis. An "overbought" or "oversold" signal on a technical indicator paired with extreme Commercial positioning can be powerful.

C. Combining COT Data with Technical Analysis:

  • Support and Resistance Levels: Use COT data in conjunction with key support and resistance levels. If Commercials are accumulating longs near a major support level, it strengthens the likelihood of a price bounce.
  • Trendlines: Analyze price trends and use trendlines to identify potential entry and exit points. Combine trendline breaks with COT signals for stronger confirmation.
  • Moving Averages: Use moving averages to identify the overall trend and potential areas of support or resistance.
  • Candlestick Patterns: Look for bullish or bearish candlestick patterns near key levels to confirm COT signals.

IV. Risk Management:

  • Position Sizing: Never risk more than a small percentage (e.g., 1-2%) of your trading capital on a single trade.
  • Stop-Loss Orders: Always use stop-loss orders to limit potential losses. Place stop-loss orders at logical levels based on technical analysis and market volatility.
  • Margin Management: Carefully monitor your margin levels and avoid over-leveraging your account.
  • Market Volatility: Milk IV futures can be volatile. Adjust position sizes and stop-loss levels based on market volatility.
  • News Events: Be aware of upcoming news events that could impact milk prices, such as USDA reports, weather forecasts, and changes in government policy.
  • Diversification: Don't put all your eggs in one basket. Diversify your trading portfolio across different commodities and asset classes.

V. Tools and Resources:

  • CFTC Website: Access the COT report and related information at the CFTC website (cftc.gov).
  • CME Group Website: Get information on Milk IV futures contract specifications, margin requirements, and trading hours at the CME Group website (cmegroup.com).
  • Commodity News and Analysis: Stay informed about market developments through reputable commodity news sources (e.g., Bloomberg, Reuters, Wall Street Journal).
  • Charting Software: Use charting software to analyze price trends, identify support and resistance levels, and apply technical indicators.
  • COT Analysis Tools: Consider using specialized COT analysis tools or websites that provide visual representations of COT data and historical comparisons.

VI. Important Considerations for Retail Traders:

  • Experience and Knowledge: Thoroughly understand the milk market and futures trading before risking real capital.
  • Emotional Control: Avoid making impulsive trading decisions based on fear or greed. Stick to your trading plan and risk management rules.
  • Continuous Learning: The market is constantly evolving. Stay up-to-date on the latest developments and refine your trading strategy as needed.
  • Professional Advice: Consider seeking advice from a qualified financial advisor or commodity trading advisor (CTA).

VII. Disclaimer:

This trading strategy is for educational purposes only and should not be considered investment advice. Futures trading involves substantial risk of loss and is not suitable for all investors. Always conduct your own research and due diligence before making any trading decisions. The past performance of any trading strategy is not indicative of future results.

VIII. Example Trade Scenario:

Scenario: It's early spring. Milk prices have been declining steadily for the past few weeks. The latest COT report shows that Commercials have been aggressively adding to their net long positions over the past three weeks. Open interest is increasing. Technical analysis shows that the price is approaching a major support level. The USDA is expected to release a report next week.

Action:

  1. Fundamental Analysis: Monitor weather conditions and USDA reports for signs of potential supply issues or increased demand.
  2. Technical Analysis: Identify the key support level and watch for bullish candlestick patterns (e.g., hammer, engulfing pattern) as the price approaches it.
  3. COT Analysis: Confirm that Commercials are continuing to add to their net long positions. Check the positions of Large Speculators. If they are shorting, this adds further confirmation to the potential for a bounce.
  4. Entry: If you see a bullish candlestick pattern near the support level and the COT data confirms the bullish sentiment of the Commercials, consider entering a long position in Milk IV futures.
  5. Stop-Loss: Place a stop-loss order slightly below the support level to protect against potential losses.
  6. Profit Target: Set a profit target based on technical resistance levels or a percentage gain that aligns with your risk tolerance.
  7. Monitoring: Continuously monitor the market and adjust your stop-loss order as the price moves in your favor.
  8. News Event: Be prepared for potential volatility when the USDA report is released. Consider tightening your stop-loss order or taking profits before the report is released.

This comprehensive trading strategy provides a framework for using the COT report to inform trading decisions in CME Milk IV futures. Remember to combine COT data with fundamental analysis, technical analysis, and sound risk management practices. This strategy is not foolproof, and losses are possible. Always trade responsibly and at your own risk.