High food prices, too much speculation and now the “February Break”

Market Pulse: Feb. 22, 2011

COT Data

But in futures, what is the buy-side and sell-side telling us? In the older COT report, which you can see on the Commercial Tracker below, commercials in corn went from a 52-week low of 408,170 contracts net-short to 407,795 net-short. In soybeans, commercials went from 202,008 contracts net-short to 177,574 net-short. Finally, commercials in wheat went from a 52-week low of 32,577 contracts net-short to 21,061 net-short. For a detailed view of what really is happening with “big money,” view the charts below with the new Disaggregated COT report. Check out how many traders make up the Swap Dealers.

If you ever wondered how everything got out of hand, then read the rules (or lack there-of) below that were put in place in the early 1990’s. The government truly closed their eyes to everything.

July 1992: ­ The CFTC approves final rules that exempt commodity pool operators and commodity trading advisors of pools sold exclusively to certain highly accredited investors from specific disclosure, reporting and recordkeeping requirements.

October 28, 1992: ­ President Bush signs the CFTC's reauthorization legislation, the Futures Trading Practices Act of 1992 (FTPA), expanding the CFTC's regulatory authority and reauthorizing the agency until October 1994. The Futures Trading Practices Act, among other things, granted the Commission the authority to exempt over-the-counter (OTC) derivative and other transactions from CFTC regulation and provided for registration of local traders.

January 22, 1993: ­ Using new exemptive authority granted in the Futures Trading Practices Act, the CFTC exempts certain swap agreements and hybrid instruments from regulation under the Commodity Exchange Act.

January 1994: ­ In response to a recommendation in the CFTC's OTC Derivative Markets Report, the President's Working Group on Financial Markets expands its charter to encompass new developments in financial markets, including the growth of OTC derivatives.

Commodity 12-mo low
12-mo hi
18-Feb
11-Feb
Cattle (feed) -2,917
7,100
877
715
Cattle (live) -73,179
-18,177
-31,772
-31,628
Hogs -38,039
836
-34,636
-31,866
Corn -408,170
119,389
-407,795
-408,170
Oats -7,416
829
-7,416
-7,048
Soybeans -203,260
56,797
-177,574
-202,008
Soybean meal -90,487
-6,350
-72,241
-82,242
Soybean oil -117,444
32,394
-91,423
-117,444
Wheat -32,577
76,473
-21,061
-32,577
Orange juice -18,722
-6,588
-13,784
-17,798
Coffee -47,729
-4,637
-41,624
-43,546
Cocoa -35,701
8,586
-34,191
-32,951
Sugar -221,694
-104,983
-191,183
-202,695
Cotton -69,857
-12,970
-43,495
-39,191
British pound -66,435
97,211
-66,435
-34,723
Canada dollar -105,107
-13,109
-101,826
-76,360
Euro FX -62,835
124,494
-42,313
-47,883
Japanese yen -52,533
92,866
33,512
-28,940
Swiss franc -33,169
27,482
-17,059
-21,517
US dollar index -41,395
6,036
3,662
6,036
Mexican Peso -118,008
-14,488
-114,613
-110,315
Australian dollar -102,706
-10,793
-85,274
-91,086
S&P 500 -88,893
33,981
-18,549
-22,667
T-note -10 yr -74,761
356,573
196,502
177,910
T-bond -30 yr -43,324
158,206
72,278
49,027
Eurodollar -1,179,414
105,872
65,679
41,528
Crude oil -221,010
-23,057
-216,556
-221,010
Heating oil -66,097
7,568
-52,592
-58,687
Unleaded gas -91,597
-10,453
-74,135
-79,817
Natural gas 111,345
208,636
208,636
185,148
Copper -36,201
1,793
-33,673
-33,230
Gold -302,740
-193,197
-218,626
-209,911
Platinum -34,909
-15,759
-33,350
-34,909
Silver -65,413
-39,770
-55,047
-51,117

Commercial Net Tracker instructions: This form tracks the Commitment of Traders (COT) data for the commodity futures market. This form "looks" at the most recent five weeks of COT data and provides visual indications of the data. A) If the current value is at a 12-month low, the cell will display a red/burgundy background. B) If the current value is at a 12-month high, the cell will display a green background. C) If the current value went from net negative to net positive, the cell will display a blue background (indicating a bullish condition). D) If the current value is both a 12-month high and also went from a net negative to a net positive, the background will be green. You should view the data with green backgrounds to determine if they also went from net negative to net positive.

If you need help understanding how to understand how to use the COT report to your benefit, please email me at Gary@crbtrader.com and put COT report in the subject line. Please include your name and telephone number in the email.

Proceed to Page 3 for this week's detailed fundementals charts...

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