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Buy
Based on the latest 13 weeks of non-commercial positioning data. ℹ️

Cocoa (Non-Commercial)

13-Wk Max 41,996 13,987 3,490 1,560 28,009
13-Wk Min 23,423 8,812 -9,471 -3,129 14,611
13-Wk Avg 29,270 10,895 -802 -344 18,375
Report Date Long Short Change Long Change Short Net Position Rate of Change (ROC) ℹ️ Open Int.
May 13, 2025 30,518 9,650 3,490 -467 20,868 23.40% 96,891
May 6, 2025 27,028 10,117 -309 132 16,911 -2.54% 90,835
April 29, 2025 27,337 9,985 2,225 450 17,352 11.40% 89,727
April 22, 2025 25,112 9,535 1,689 723 15,577 6.61% 86,919
April 15, 2025 23,423 8,812 -3,392 -205 14,611 -17.91% 90,046
April 8, 2025 26,815 9,017 -3,932 -3,129 17,798 -4.32% 95,581
April 1, 2025 30,747 12,146 1,883 1,560 18,601 1.77% 109,183
March 25, 2025 28,864 10,586 522 -1,286 18,278 10.98% 103,546
March 18, 2025 28,342 11,872 -46 780 16,470 -4.78% 104,840
March 11, 2025 28,388 11,092 -1,022 -667 17,296 -2.01% 104,926
March 4, 2025 29,410 11,759 -3,115 -1,315 17,651 -9.25% 101,302
February 25, 2025 32,525 13,074 -9,471 -913 19,451 -30.55% 108,662
February 18, 2025 41,996 13,987 1,049 -141 28,009 4.44% 115,974

Net Position (13 Weeks) - Non-Commercial

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

COT Interpretation for COCOA

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 Buy
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.

Cocoa Trading Strategy Based on COT Report Analysis (Retail Trader & Market Investor)

This strategy leverages the Commitment of Traders (COT) report to understand the positioning of different market participants in the cocoa market, helping retail traders and market investors identify potential trading opportunities.

I. Understanding the COT Report for Cocoa (ICUS - ICE Futures U.S.):

  • What is the COT Report? The COT report, released weekly by the CFTC (Commodity Futures Trading Commission), summarizes the positions held by various trader categories in the futures markets.

  • Key Trader Categories:

    • Commercials (Hedgers): Companies involved in the production, processing, or consumption of cocoa (e.g., chocolate manufacturers, cocoa bean processors, farmers). They primarily use futures to hedge price risk.
    • Non-Commercials (Large Speculators): Primarily hedge funds, managed money, and other large institutional investors. They are profit-seeking traders.
    • Non-Reportable Positions (Small Speculators): Small retail traders whose positions are not large enough to be individually reported. Their data is often inferred as the difference between the total open interest and the reported positions of Commercials and Non-Commercials.

  • Key Data Points to Track:

    • Net Positions: The difference between long and short positions for each category. A positive net position means more traders in that category are bullish (long), while a negative position indicates a bearish (short) outlook.
    • Changes in Net Positions: The week-over-week change in net positions. This reveals how each category is adjusting their outlook.
    • Open Interest: The total number of outstanding futures contracts. Increasing open interest generally confirms the trend, while decreasing open interest may signal a weakening trend.

II. Interpretation of COT Data in the Cocoa Market:

  • Commercials as Leading Indicators: Commercials are often considered the "smart money" as they have the best knowledge of the underlying cocoa market fundamentals (supply, demand, weather, etc.).
    • Bullish Signal: When commercials significantly reduce their net short positions (or increase their net long positions), it suggests they expect prices to rise, possibly due to supply concerns or increased demand.
    • Bearish Signal: When commercials significantly increase their net short positions (or reduce their net long positions), it suggests they expect prices to fall, possibly due to oversupply or decreased demand.
  • Non-Commercials as Trend Followers: Non-Commercials often follow the trends established by commercials and overall market sentiment.
    • Confirmation: When non-commercials and commercials are aligned (both bullish or both bearish), it reinforces the potential for a strong trend.
    • Contradiction: When non-commercials and commercials diverge, it can signal a potential trend reversal or a period of uncertainty. Pay close attention to which side eventually wins out.
  • Small Speculators as Potential Contrarians: Small speculators are often considered the least informed and tend to be wrong at market extremes.
    • Contrarian Signal: Extreme bullishness (large net long positions) among small speculators might suggest an overbought market ripe for a correction. Conversely, extreme bearishness (large net short positions) could indicate an oversold market poised for a rebound. Use this with caution!

III. Trading Strategy – COT Report Based Cocoa:

This strategy combines COT data with technical analysis and fundamental considerations.

  1. Data Collection & Analysis:

    • Source: Obtain the weekly COT report from the CFTC website (cftc.gov).
    • Spreadsheet: Create a spreadsheet to track the net positions and changes in net positions for Commercials, Non-Commercials, and Open Interest over time.
    • Visualizations: Graph the data to visualize trends and identify extremes.

  2. Fundamental Analysis:

    • Supply & Demand: Stay informed about cocoa production forecasts from major growing regions (West Africa), weather conditions, disease outbreaks (cocoa swollen shoot virus), and demand trends from chocolate manufacturers.
    • Economic Factors: Monitor currency fluctuations (especially those affecting cocoa-producing countries) and global economic growth, which can influence chocolate consumption.

  3. Technical Analysis:

    • Price Charts: Analyze cocoa price charts (daily, weekly) to identify trends, support and resistance levels, and potential chart patterns (e.g., head and shoulders, double tops/bottoms).
    • Indicators: Use technical indicators such as moving averages, RSI (Relative Strength Index), MACD (Moving Average Convergence Divergence) to confirm trends and identify overbought/oversold conditions.

  4. Trading Signals:

    • High-Probability Setup (Commercials Lead, Non-Commercials Confirm):

      • Bullish:
        • Commercials significantly reduce net short positions (or increase net long positions).
        • Non-commercials follow by increasing their net long positions.
        • Open interest increases, confirming the bullish momentum.
        • Price breaks above a key resistance level on the price chart.
        • Positive fundamental news supports the bullish outlook (e.g., supply shortage).
        • Action: Consider a long (buy) position.
      • Bearish:
        • Commercials significantly increase net short positions (or reduce net long positions).
        • Non-commercials follow by increasing their net short positions.
        • Open interest increases, confirming the bearish momentum.
        • Price breaks below a key support level on the price chart.
        • Negative fundamental news supports the bearish outlook (e.g., oversupply).
        • Action: Consider a short (sell) position.

    • Contrarian Signal (Commercials Oppose Non-Commercials):

      • Potential Reversal: If commercials and non-commercials are diverging for a sustained period (several weeks), it could indicate a potential trend reversal.
      • Risk Management is Crucial: This is a higher-risk setup and requires careful risk management. Wait for confirmation from price action (e.g., a break of a trendline or a reversal pattern) before taking a position.

  5. Entry and Exit Strategies:

    • Entry: Enter positions based on technical confirmation of the COT signals (e.g., a breakout above resistance after a bullish COT signal).
    • Stop-Loss Orders: Place stop-loss orders below a recent swing low (for long positions) or above a recent swing high (for short positions) to limit potential losses.
    • Profit Targets: Set profit targets based on technical analysis (e.g., at a key resistance level for long positions, or at a key support level for short positions). You can also use Fibonacci extensions to project potential profit targets.
    • Trailing Stops: Consider using trailing stops to lock in profits as the trade moves in your favor.

  6. Risk Management:

    • Position Sizing: Never risk more than 1-2% of your trading capital on any single trade.
    • Diversification: Don't put all your eggs in one basket. Diversify your portfolio across different asset classes and commodities.
    • Emotional Control: Stick to your trading plan and avoid making impulsive decisions based on fear or greed.
    • Leverage: Use leverage cautiously, as it can amplify both profits and losses.

IV. Important Considerations & Cautions:

  • Lagging Indicator: The COT report is released with a delay (published every Friday, covering the positions as of the preceding Tuesday). Market conditions can change significantly between Tuesday and Friday.
  • Not a Holy Grail: The COT report is just one tool among many. It should not be used in isolation but rather in conjunction with other forms of analysis (fundamental, technical, sentiment).
  • Commercials Can Be Wrong: Even the "smart money" can make mistakes. Do not blindly follow the commercials.
  • Market Nuances: Cocoa market dynamics can be influenced by various factors, including weather patterns, political instability in producing countries, and changes in consumer preferences.
  • Market Volatility: Commodity markets, including cocoa, can be volatile. Be prepared for price swings and have a solid risk management plan in place.
  • Specific Contract Months: Pay attention to the specific cocoa contract month being analyzed (e.g., December, March, May, July, September). Different contract months may have different COT positioning.
  • Continuous Adjustment: Continuously refine your strategy based on market conditions and your own trading experience.
  • Further Research: Explore other resources, such as cocoa market reports from industry analysts and government agencies (like the ICCO - International Cocoa Organization), to deepen your understanding of the market.

V. Example Scenario:

Imagine the COT report reveals that commercials have significantly reduced their net short positions in cocoa futures, while non-commercials are slowly starting to increase their long positions. Simultaneously, news surfaces about a potential drought in West Africa, which could impact cocoa bean yields. On the price chart, cocoa prices have broken above a key resistance level after forming a bullish flag pattern.

In this scenario, the COT data aligns with the fundamental news and technical analysis, suggesting a high-probability setup for a long (buy) position in cocoa futures. A trader might enter a long position, placing a stop-loss order below the recent swing low and setting a profit target at the next major resistance level.

VI. Adapting for Different Trader Profiles:

  • Retail Trader (Smaller Capital, Less Time): Focus on high-probability setups where commercials and non-commercials are aligned. Use shorter-term timeframes (daily charts) and tighter stop-loss orders. Consider trading smaller contract sizes (mini contracts, if available) or options on cocoa futures to manage risk.
  • Market Investor (Larger Capital, Longer Time Horizon): Take a more strategic approach, considering the long-term trends in the cocoa market. Use longer-term timeframes (weekly charts) and be prepared to hold positions for several weeks or months. Consider using exchange-traded products (ETPs) or managed futures funds that invest in cocoa.

Disclaimer: Trading commodities involves significant risk of loss and is not suitable for all investors. This strategy is for informational purposes only and does not constitute financial advice. Always conduct your own research and consult with a qualified financial advisor before making any trading decisions. Past performance is not indicative of future results.