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

NFX SM10TC SUPRAMAX 10T/C AVG (Non-Commercial)

13-Wk Max 6,806 7,795 60 420 -192
13-Wk Min 3,340 3,915 -2,010 -1,710 -989
13-Wk Avg 5,757 6,275 -291 -260 -517
Report Date Long Short Change Long Change Short Net Position Rate of Change (ROC) ℹ️ Open Int.
December 24, 2019 3,340 3,915 -125 -178 -575 8.44% 7,252
December 17, 2019 3,465 4,093 -2,010 -1,710 -628 -91.46% 7,070
December 10, 2019 5,475 5,803 0 0 -328 0.00% 16,848
December 3, 2019 5,475 5,803 -416 -437 -328 6.02% 16,848
November 26, 2019 5,891 6,240 53 210 -349 -81.77% 18,044
November 19, 2019 5,838 6,030 0 -30 -192 13.51% 17,883
November 12, 2019 5,838 6,060 -28 -210 -222 45.05% 17,848
November 5, 2019 5,866 6,270 -710 -935 -404 35.77% 18,003
October 29, 2019 6,576 7,205 -200 -530 -629 34.41% 19,498
October 22, 2019 6,776 7,735 -30 -60 -959 3.03% 19,533
October 15, 2019 6,806 7,795 60 275 -989 -27.78% 19,593
October 8, 2019 6,746 7,520 -5 420 -774 -121.78% 19,538
October 1, 2019 6,751 7,100 -369 -191 -349 -104.09% 19,313

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 trading strategy for the NFX SM10TC Supramax Freight Rate Futures contract, focusing on how a retail trader or market investor can leverage the Commitments of Traders (COT) report to make informed decisions.

Understanding the NFX SM10TC Supramax Freight Rate Futures Contract

  • What it is: This futures contract allows traders to speculate on the price of Supramax vessel freight rates (specifically, a basket of 10 common time charter routes) within the dry bulk shipping market. Supramax vessels are typically used for transporting commodities like grains, coal, and iron ore.
  • Significance: Freight rates are a leading indicator of global trade and economic activity. Higher rates generally indicate strong demand for shipping, which often correlates with healthy commodity demand and economic growth.
  • Volatility: Freight rates can be quite volatile due to factors like seasonality, weather, geopolitical events, and global commodity demand fluctuations.
  • Leverage: Futures contracts offer significant leverage, meaning a small deposit (margin) controls a much larger contract value. This amplifies both potential profits and losses.
  • Risk: This is a relatively niche market. Liquidity may be lower than in more mainstream futures contracts. This increases the potential for slippage and larger price swings. Thorough risk management is crucial.

Using the COT Report for the NFX SM10TC Supramax Contract

The COT report provides a breakdown of the positions held by different trader categories in the futures market. Specifically, we're interested in:

  • Commercials (Hedgers): These are companies that use the futures market to hedge their price risk. In the case of freight rates, this would include shipping companies (locking in rates for future voyages) and commodity traders (hedging transportation costs).
  • Non-Commercials (Large Speculators): These are large traders, such as hedge funds and institutional investors, who are primarily speculating on price movements.
  • Non-Reportable Positions (Small Traders): This is the residual category, including positions too small to be individually reported. This often represents a collection of smaller retail traders.

COT-Based Trading Strategy for Retail Traders & Market Investors

Here's a strategy incorporating the COT report, designed to be more conservative and risk-aware, suitable for retail traders and market investors:

1. Data Acquisition and Analysis

  • Source: Obtain the COT report data from the CFTC website (cftc.gov). Look for the "Supplemental" report for a more detailed breakdown of positions.
  • Focus: Track the net positions (long positions minus short positions) of Commercials and Non-Commercials over time.
  • Tools: Use charting software or spreadsheet programs (Excel, Google Sheets) to visualize the data. Calculate the weekly change in net positions.

2. Identify Key Signals

  • Commercials as a Guide: Commercials are considered to be the "smart money" in this market. They have the most intimate knowledge of the supply and demand dynamics of freight rates.
    • Increasing Net Short Positions (Commercials): This generally suggests that commercials expect freight rates to decline. They are hedging against potential drops in revenue. This can be a bearish signal.
    • Increasing Net Long Positions (Commercials): This generally suggests that commercials expect freight rates to rise. They might be anticipating increased demand for shipping. This can be a bullish signal.
  • Divergence: Pay close attention to divergences between the price of the NFX SM10TC contract and the COT data.
    • Price Rising, Commercials Increasing Net Shorts: This can be a warning sign. The market is rallying, but the commercials, who are closest to the underlying market, are hedging against a potential downturn.
    • Price Falling, Commercials Increasing Net Longs: This can indicate a potential buying opportunity. The market is declining, but the commercials are accumulating long positions, suggesting they see value at these levels.
  • Extreme Readings: Identify historical extremes in net positions for both Commercials and Non-Commercials. These extremes can signal overbought or oversold conditions. For example, if Commercials are at their most net short position in several years, it might indicate the market is nearing a top.

3. Confirmation and Confluence

  • Technical Analysis: Always confirm COT signals with technical analysis. Use indicators like moving averages, trendlines, support and resistance levels, and oscillators (RSI, MACD).
  • Fundamental Analysis: Consider the broader fundamental factors driving freight rates:
    • Global Economic Growth: Is the global economy expanding or contracting?
    • Commodity Demand: Are key commodities like iron ore and coal in high demand?
    • Shipping Supply: Are there new vessels being built, or are older vessels being scrapped?
    • Geopolitical Events: Trade wars, sanctions, and political instability can significantly impact shipping routes and demand.
  • News and Sentiment: Keep up-to-date with industry news and sentiment. Read reports from shipping analysts and industry publications.

4. Entry and Exit Strategy

  • Entry Triggers:
    • Bullish Scenario: Commercials increasing net longs, price showing bullish technical patterns (e.g., breakout above resistance), positive fundamental outlook.
    • Bearish Scenario: Commercials increasing net shorts, price showing bearish technical patterns (e.g., breakdown below support), negative fundamental outlook.
  • Stop-Loss Orders: Place stop-loss orders immediately after entering a trade. This is crucial for managing risk. Consider using a percentage-based stop-loss (e.g., 1-2% of your trading capital) or placing the stop-loss below a significant technical support level (for long positions) or above a significant resistance level (for short positions).
  • Profit Targets: Set realistic profit targets based on technical analysis and your risk/reward ratio. Consider using Fibonacci retracement levels or previous swing highs/lows as potential targets.
  • Scaling In/Out (Optional): To manage risk, consider scaling into positions gradually. Also, consider scaling out of positions as you approach your profit targets.

5. Risk Management

  • Position Sizing: Never risk more than a small percentage of your trading capital on any single trade (e.g., 1-2%).
  • Leverage: Be extremely cautious with leverage. The NFX SM10TC contract is volatile, and excessive leverage can lead to rapid losses. Start with small position sizes.
  • Diversification: Do not put all your eggs in one basket. Diversify your portfolio across different asset classes and markets.
  • Trading Plan: Develop a detailed trading plan and stick to it. This will help you avoid emotional decisions.
  • Regular Review: Review your trading performance regularly. Identify your strengths and weaknesses, and adjust your strategy accordingly.

Example Trade Scenario (Hypothetical)

  1. Observation: The price of the NFX SM10TC contract has been declining for several weeks.
  2. COT Analysis: You notice that Commercials have been steadily increasing their net long positions. They are accumulating long positions even as the price falls.
  3. Technical Analysis: The price is approaching a key support level, and the RSI is oversold.
  4. Fundamental Analysis: You research the market and find that analysts are predicting a rebound in commodity demand in the coming months.
  5. Entry: You decide to enter a long position near the support level, with a stop-loss order placed slightly below the support.
  6. Profit Target: You set a profit target based on a previous swing high.
  7. Risk Management: You risk only 1% of your trading capital on this trade.

Important Considerations

  • Liquidity: Be aware of the contract's liquidity, especially during off-peak hours. Avoid placing market orders if liquidity is thin.
  • Contract Specifications: Familiarize yourself with the full contract specifications, including tick size, margin requirements, and delivery procedures.
  • Market Conditions: Adapt your strategy to changing market conditions. Be prepared to adjust your risk tolerance and position sizing as needed.
  • Backtesting: Before risking real capital, backtest your strategy using historical data to assess its potential profitability and risk.
  • Paper Trading: Practice your strategy using a demo account (paper trading) to get a feel for the market and test your execution skills.
  • Education: Continuously educate yourself about the freight rate market, technical analysis, and risk management.
  • Professional Advice: Consider consulting with a qualified financial advisor before making any investment decisions.
  • Correlation: Check correlation of dry freight with other market and commodity data.

Disclaimer:

This is for educational purposes only and should not be considered investment advice. Trading futures involves substantial risk of loss. Consult with a qualified financial advisor before making any investment decisions.