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

UREA (GRANULAR) FOB US GULF (Non-Commercial)

13-Wk Max 1,755 550 180 90 1,225
13-Wk Min 1,005 350 -240 -115 580
13-Wk Avg 1,366 461 -60 -13 905
Report Date Long Short Change Long Change Short Net Position Rate of Change (ROC) ℹ️ Open Int.
March 15, 2022 1,055 350 0 0 705 21.55% 2,240
March 1, 2022 1,005 425 -240 60 580 -34.09% 2,165
February 22, 2022 1,245 365 180 -60 880 37.50% 2,445
February 15, 2022 1,065 425 -45 -50 640 0.79% 2,280
February 8, 2022 1,110 475 -30 -15 635 -2.31% 2,280
February 1, 2022 1,140 490 -180 90 650 -29.35% 2,170
January 25, 2022 1,320 400 -105 -115 920 1.10% 2,690
January 18, 2022 1,425 515 -95 55 910 -14.15% 2,761
January 11, 2022 1,520 460 -165 -45 1,060 -10.17% 2,745
January 4, 2022 1,685 505 0 0 1,180 0.00% 2,700
December 28, 2021 1,685 505 -70 -25 1,180 -3.67% 2,700
December 21, 2021 1,755 530 10 -20 1,225 2.51% 3,005
December 14, 2021 1,745 550 15 -30 1,195 3.91% 3,015

Net Position (13 Weeks) - Non-Commercial

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

COT Interpretation for FERTILIZER

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.

Okay, let's craft a comprehensive trading strategy for Urea (Granular) FOB US Gulf futures contracts, leveraging the Commitments of Traders (COT) report data. This strategy is tailored for retail traders and market investors.

I. Understanding the Basics

  • Commodity: Urea (Granular) FOB US Gulf. This is a nitrogen-based fertilizer, a critical input for agriculture. Its price is influenced by factors like natural gas prices (a key input in urea production), global demand, weather patterns, agricultural planting seasons, and trade flows.
  • Contract Size: Contracts of 100 metric tons.
  • Exchange: Chicago Board of Trade (CBT). While sometimes called CBT, it's traded on the CME Group platform (Globex). Always check the CME Group website for the most up-to-date specifications.
  • CFTC Market Code: CBT. This helps identify the specific Urea contract within the COT report.
  • COT Report: The Commitments of Traders (COT) report is published weekly by the Commodity Futures Trading Commission (CFTC). It provides a breakdown of open interest (total number of outstanding futures contracts) held by different groups of traders. The key groups are:
    • Commercials (Hedgers): Entities directly involved in the production, processing, or use of the commodity (e.g., fertilizer manufacturers, agricultural companies). They primarily use futures to hedge price risk associated with their physical business.
    • Non-Commercials (Large Speculators): Hedge funds, managed money, and other large traders who are primarily trading for profit.
    • Non-Reportable Positions (Small Speculators): Small traders whose positions are below the reporting level. This category is often considered "noise" but can sometimes provide contrarian signals when positions are extreme.

II. Data Acquisition and Preparation

  1. COT Report Source: The official source is the CFTC website. You can download the "Legacy" or "Disaggregated" COT report in text or Excel format. The "Disaggregated" report is generally preferred as it offers more granular detail. Look for the Urea Granular FOB US Gulf data specifically.
  2. Data Frequency: The COT report is released every Friday, usually at 3:30 PM Eastern Time, and reflects positions as of the previous Tuesday.
  3. Data Analysis:
    • Calculate Net Positions: For each group (Commercials, Non-Commercials), calculate the net position: Net Position = Long Positions - Short Positions.
    • Track Changes Over Time: Monitor how the net positions of each group change from week to week. Are Commercials becoming more bullish (reducing their short positions or increasing their long positions)? Are Non-Commercials increasing their long positions?
    • Calculate COT Index (Optional): A COT Index normalizes the net positions over a specific historical period (e.g., 3 years). It expresses the current net position as a percentage of its historical range. A high COT Index reading suggests a potentially overbought condition, while a low reading suggests a potentially oversold condition.
    • Spread Charts: Create charts that compare the price of Urea futures against the net positions of Commercials and Non-Commercials. This helps visualize the relationship between trader sentiment and price movement.

III. Trading Strategy Based on COT Data

This strategy combines COT data with price action analysis and other technical indicators. It's essential to adapt the strategy to your risk tolerance and trading style.

  • Core Principle: Follow the "smart money" (Commercials). Commercials are typically considered the most informed traders because of their direct involvement in the urea market.

  • Strategy Steps:

    1. Identify a Trend: Determine the overall trend of Urea futures using price charts (daily, weekly). Use trendlines, moving averages (e.g., 50-day, 200-day), and other technical indicators to assess the direction.

    2. COT Confirmation:

      • Uptrend: Look for Commercials to be reducing their net short positions (or increasing their net long positions) during the uptrend. This suggests that the smart money is becoming more bullish, supporting the uptrend. Non-Commercials may also be increasing their long positions, but the Commercials' activity is the primary focus.
      • Downtrend: Look for Commercials to be reducing their net long positions (or increasing their net short positions) during the downtrend. This suggests that the smart money is becoming more bearish, confirming the downtrend.
      • Divergence: If the price is making new highs, but Commercials are increasing their net short positions, this could be a bearish divergence, suggesting that the uptrend may be weakening. Conversely, if the price is making new lows, but Commercials are decreasing their net short positions (or increasing longs), this could be a bullish divergence.

    3. Entry Signals: Once you have COT confirmation of the trend (or a potential trend reversal indicated by divergence), use price action and other technical indicators to identify specific entry points:

      • Long Entry (Uptrend Confirmed):
        • Pullbacks: Enter on pullbacks to support levels (identified through trendlines, moving averages, or Fibonacci retracements).
        • Breakouts: Enter on breakouts above resistance levels.
        • Candlestick Patterns: Look for bullish candlestick patterns (e.g., bullish engulfing, morning star) at support levels.
      • Short Entry (Downtrend Confirmed):
        • Rallies: Enter on rallies to resistance levels.
        • Breakdowns: Enter on breakdowns below support levels.
        • Candlestick Patterns: Look for bearish candlestick patterns (e.g., bearish engulfing, evening star) at resistance levels.

    4. Stop-Loss Placement: Crucially important! Place your stop-loss order to limit your potential losses.

      • Long Entry: Place the stop-loss below the recent swing low or below a key support level.
      • Short Entry: Place the stop-loss above the recent swing high or above a key resistance level.

    5. Profit Target: Set a realistic profit target based on technical analysis (e.g., Fibonacci extensions, previous resistance/support levels). You can also use a risk-reward ratio (e.g., 2:1 or 3:1).

    6. Trade Management:

      • Trailing Stop: Consider using a trailing stop to lock in profits as the price moves in your favor.
      • Partial Profit Taking: Take partial profits at key levels to reduce your risk and secure some gains.
      • COT Monitoring: Continue to monitor the COT report. If the Commercials' position changes significantly against your trade, consider tightening your stop-loss or exiting the trade.

IV. Example Scenario

Let's say the weekly chart of Urea futures shows a clear uptrend.

  1. COT Report: You see that Commercials have been steadily reducing their net short positions over the past several weeks, while the price has been rising. This confirms the uptrend.
  2. Entry: You identify a pullback to the 50-day moving average, which is acting as support. You also see a bullish engulfing candlestick pattern forming at that support level.
  3. Entry Trigger: You place a long entry order slightly above the high of the bullish engulfing candle.
  4. Stop-Loss: You place a stop-loss order below the low of the bullish engulfing candle.
  5. Profit Target: You set a profit target at a previous resistance level (identified on the chart) or at a Fibonacci extension level.

V. 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. Trade different commodities and asset classes to reduce your overall risk.
  • Emotional Control: Stick to your trading plan and avoid making impulsive decisions based on fear or greed.

VI. Additional Considerations

  • Fundamental Analysis: Stay informed about fundamental factors that can affect Urea prices, such as:
    • Natural Gas Prices: Natural gas is a major input cost for urea production.
    • Weather Patterns: Weather conditions can impact crop yields and fertilizer demand.
    • Planting Seasons: Fertilizer demand typically peaks during planting seasons.
    • Government Policies: Government subsidies, tariffs, and regulations can affect the fertilizer market.
    • Global Economic Conditions: Economic growth can drive agricultural demand and, consequently, fertilizer demand.
  • Seasonality: Urea prices tend to exhibit seasonal patterns. Research historical price data to identify these patterns.
  • Market Sentiment: Pay attention to market news and sentiment. Extreme bullish or bearish sentiment can sometimes signal potential reversals.
  • Other Technical Indicators: Combine COT data with other technical indicators, such as RSI (Relative Strength Index), MACD (Moving Average Convergence Divergence), and Stochastics, to confirm your trading signals.
  • Correlation with Corn, Wheat, and Other Grains: Urea, as a fertilizer, is highly correlated with grains. Analyze the performance of Corn and Wheat futures to improve understanding of Urea's movement.

VII. Disclaimer

This trading strategy is for educational purposes only and should not be considered financial advice. Trading futures involves substantial risk of loss, and you should only trade with money you can afford to lose. Always conduct your own research and consult with a qualified financial advisor before making any trading decisions.

VIII. Key Takeaways

  • The COT report provides valuable insights into the positions of Commercials and Non-Commercials.
  • Following the Commercials can be a profitable strategy, as they are typically the most informed traders.
  • COT data should be used in conjunction with price action analysis and other technical indicators.
  • Risk management is essential for success in futures trading.
  • Stay informed about fundamental factors that can affect Urea prices.
  • Adapt the strategy to your risk tolerance and trading style.
  • Continuously monitor your trades and adjust your positions as needed.

By combining COT data with sound technical and fundamental analysis, you can increase your chances of success in trading Urea futures. Good luck!