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

NFX CS5TC CAPESIZE 5T/C AVG (Non-Commercial)

13-Wk Max 10,534 7,418 1,024 210 3,727
13-Wk Min 1,861 2,770 -5,246 -1,979 -1,294
13-Wk Avg 6,922 5,539 -495 -346 1,383
Report Date Long Short Change Long Change Short Net Position Rate of Change (ROC) ℹ️ Open Int.
January 21, 2020 1,861 2,770 -655 -1,040 -909 29.75% 5,299
January 14, 2020 2,516 3,810 -1,203 0 -1,294 -1,321.98% 6,980
January 7, 2020 3,719 3,810 175 0 -91 65.79% 8,364
December 31, 2019 3,544 3,810 -869 -1,095 -266 45.93% 8,364
December 24, 2019 4,413 4,905 -840 -83 -492 -285.66% 11,698
December 17, 2019 5,253 4,988 -5,246 -1,979 265 -92.50% 10,776
December 10, 2019 10,499 6,967 -35 160 3,532 -5.23% 23,815
December 3, 2019 10,534 6,807 357 -117 3,727 14.57% 23,813
November 26, 2019 10,177 6,924 5 210 3,253 -5.93% 26,134
November 19, 2019 10,172 6,714 365 120 3,458 7.63% 25,895
November 12, 2019 9,807 6,594 550 105 3,213 16.08% 25,846
November 5, 2019 9,257 6,489 1,024 -929 2,768 239.63% 25,534
October 29, 2019 8,233 7,418 -57 150 815 -20.25% 27,404

Net Position (13 Weeks) - Non-Commercial

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

COT Interpretation for FREIGHT RATE

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 based on the Commitments of Traders (COT) report for the NFX CS5TC Capesize 5T/C Average futures contract, focusing on its suitability for retail traders and market investors. This strategy will incorporate COT analysis, technical analysis, and risk management principles.

Understanding the NFX CS5TC Capesize 5T/C Average Futures Contract

Before diving into the strategy, it's crucial to understand what this contract represents:

  • Capesize Vessels: Capesize vessels are the largest class of dry bulk cargo ships, typically hauling iron ore, coal, and other bulk commodities.
  • 5T/C Average: "5T/C" likely refers to a weighted average of five major Capesize time charter routes. Time charter rates represent the cost of hiring a vessel for a specific period. The average of multiple routes gives a more comprehensive picture of the overall market conditions.
  • NFX: Nasdaq Futures Exchange.
  • CFTC: Commodity Futures Trading Commission

The Role of the COT Report

The COT report, published weekly by the CFTC, provides a breakdown of the positions held by different groups of traders in the futures market. For this strategy, we'll primarily focus on these categories:

  • Commercials (Hedgers): These are the entities directly involved in the physical shipping of bulk commodities. They use futures to hedge against price fluctuations. They're generally considered the "smart money."
  • Non-Commercials (Large Speculators): These are large institutional investors, hedge funds, and other speculators. They trade futures for profit and often follow trends.
  • Retail Traders (Small Speculators): This category represents individual traders like you.

I. Trading Strategy Based on COT Report Analysis

A. Core Principles:

  • Follow the Commercials (Hedgers): The fundamental assumption is that Commercials, due to their direct involvement in the physical market, have superior knowledge of supply and demand dynamics. We'll use their positioning as a leading indicator.
  • Confirm with Technical Analysis: COT data alone isn't a perfect predictor. We need to combine it with technical analysis to identify entry and exit points.
  • Risk Management is Paramount: Using stop-loss orders and appropriate position sizing is critical to protect capital.
  • Long-Term Perspective: Dry bulk shipping rates can be volatile, so this strategy might involve holding positions for weeks or even months.

B. Steps:

  1. COT Data Acquisition:

    • Download the Legacy COT report from the CFTC website on a weekly basis (usually released on Fridays). Look for the report that corresponds to the "NFX CS5TC CAPESIZE 5T/C AVG - NASDAQ FUTURES."
    • Alternatively, use a data provider that offers historical COT data (e.g., Bloomberg, Refinitiv, TradingView, Quandl). Some providers offer visualizations and analysis tools that simplify the process.

  2. COT Data Interpretation:

    • Commercial Net Position: Calculate the net position of the Commercials (Long positions - Short positions). Track this net position over time.
    • Changes in Commercial Net Position: Focus on the change in the Commercials' net position from week to week. Significant increases in their net long position (or decreases in their net short position) suggest a bullish outlook. The opposite suggests a bearish outlook.
    • Extreme Readings: Identify periods where the Commercials' net position reaches extreme levels, either historically high or low. These extremes can indicate potential turning points in the market. For retail traders, it is very crucial to identify the extremes of the COT reports and combine these reports with the technical indicators.

  3. Technical Analysis:

    • Price Chart Analysis: Use a daily or weekly price chart of the NFX CS5TC futures contract.
    • Trend Identification: Determine the overall trend (uptrend, downtrend, or sideways) using moving averages (e.g., 50-day, 200-day), trendlines, and other technical indicators.
    • Support and Resistance Levels: Identify key support and resistance levels using historical price data. These levels can act as potential entry and exit points.
    • Momentum Indicators: Use indicators like the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) to gauge momentum and identify overbought or oversold conditions.
    • Candlestick Patterns: Look for candlestick patterns that signal potential reversals or continuations of the trend. Example: Engulfing Patterns, Doji, Hammer.

  4. Entry Signals:

    • Bullish Signal:
      • COT Confirmation: The Commercials' net long position is increasing, or their net short position is decreasing.
      • Technical Confirmation: The price is breaking above a key resistance level, a bullish candlestick pattern is forming, or momentum indicators are showing positive divergence.
      • Overall Trend: The long trade works well with overall uptrend.
    • Bearish Signal:
      • COT Confirmation: The Commercials' net long position is decreasing, or their net short position is increasing.
      • Technical Confirmation: The price is breaking below a key support level, a bearish candlestick pattern is forming, or momentum indicators are showing negative divergence.
      • Overall Trend: The short trade works well with overall downtrend.

  5. Exit Signals:

    • Profit Target: Set a profit target based on a multiple of your risk (e.g., 2:1 or 3:1 reward-to-risk ratio). You can also use technical levels (resistance in an uptrend, support in a downtrend) as profit targets.
    • Stop-Loss Order: Place a stop-loss order below a recent swing low (for long positions) or above a recent swing high (for short positions). This limits your potential losses if the trade goes against you.
    • COT Divergence: If the Commercials' positioning starts to diverge from the price action (e.g., the price is still rising, but the Commercials are reducing their net long position), it could be a signal to exit.
    • Time Stop: If the trade doesn't move in your favor within a predetermined time frame (e.g., two weeks), consider closing the position.
    • Change in Overall Trend: If the overall trend changes against your position, it is important to exit the trade.

  6. Risk Management:

    • Position Sizing: Never risk more than 1-2% of your trading capital on any single trade.
    • Stop-Loss Orders: Always use stop-loss orders to limit potential losses.
    • Diversification: Don't put all your eggs in one basket. Diversify your portfolio across different asset classes.
    • Volatility: Be aware of the volatility of the NFX CS5TC futures contract. Adjust your position size and stop-loss levels accordingly.

II. Considerations for Retail Traders and Market Investors

  • Smaller Account Sizes: Retail traders often have smaller accounts. Focus on trading smaller contract sizes or using options strategies (if available and you understand them) to control risk.
  • Education and Experience: This strategy requires a solid understanding of futures markets, COT reports, and technical analysis. Invest time in learning these concepts.
  • Emotional Control: Trading can be emotionally challenging. Stick to your trading plan and avoid making impulsive decisions.
  • Patience: This is not a get-rich-quick scheme. It requires patience and discipline to follow the strategy consistently.
  • Data Costs: The cost of COT data can vary. Free options may be delayed or less detailed. Consider a paid data provider if you need real-time or more comprehensive data.
  • Transaction Costs: Factor in brokerage commissions and exchange fees when calculating your potential profits and losses.
  • Margin Requirements: Be aware of the margin requirements for trading futures contracts. Ensure you have sufficient capital to cover potential margin calls.

III. Example Scenario

  1. COT Analysis: You notice that the Commercials have been steadily increasing their net long position in the NFX CS5TC futures contract over the past few weeks. This suggests they anticipate higher prices.
  2. Technical Analysis: You observe that the price has broken above a key resistance level on the daily chart, and the MACD is showing a bullish crossover.
  3. Entry: You enter a long position in the NFX CS5TC futures contract at the current market price.
  4. Stop-Loss: You place a stop-loss order below the recent swing low, just below the broken resistance level.
  5. Profit Target: You set a profit target at a level that provides a 2:1 reward-to-risk ratio, based on the distance between your entry price and stop-loss level.
  6. Monitoring: You monitor the trade daily, watching for any changes in the Commercials' positioning or any adverse technical signals.
  7. Exit: The price reaches your profit target, and you close the position, realizing a profit. Alternatively, if the price reverses and hits your stop-loss, you close the position, limiting your losses.

IV. Disclaimer

This strategy is for educational purposes only and should not be considered financial advice. Trading futures involves significant risk, and you could lose all of your invested capital. Always consult with a qualified financial advisor before making any investment decisions.

V. Refinements

  • Seasonality: Consider incorporating seasonal patterns in dry bulk shipping rates into your analysis. For example, demand for iron ore typically increases in the lead-up to the winter construction season in China.
  • Global Economic Indicators: Monitor global economic indicators (e.g., GDP growth, industrial production, trade data) that can influence demand for dry bulk commodities.
  • Shipping News and Reports: Stay informed about news and reports related to the shipping industry, such as vessel supply, port congestion, and weather conditions.
  • Correlation Analysis: Examine the correlation between NFX CS5TC futures and other related markets, such as iron ore futures or shares of shipping companies.
  • Volatility-Based Position Sizing: Use volatility (e.g., Average True Range) to dynamically adjust your position size. Larger position size when volatility is low, and vice versa.

By combining COT analysis with technical analysis, risk management, and a thorough understanding of the dry bulk shipping market, retail traders and market investors can develop a more informed and potentially profitable trading strategy for the NFX CS5TC Capesize 5T/C Average futures contract. Remember to backtest your strategy and paper trade before risking real capital. Good luck!