Spread Edge Capital specializes in seasonal spread trading across a wide variety of commodity markets. A spread trade is the simultaneous purchase and sale of the same commodity with different delivery dates.  SpreadEdge publishes a weekly Newsletter that provides several seasonal spread trade opportunities every week.

Overview

Each week the SpreadEdge Newsletter documents an extensive list of seasonal, technical and fundamental indicators for the various commodity markets.  This article will focus on hedge fund position estimates for Grains and Meats and dives deeper into Corn, Soybean Meal, Chicago Wheat, and Feeder Cattle.  

Hedge Fund Position Estimates

The Commitment of Traders (COT) report, issued by the Commodity Futures Trading Commission (CFTC), offers a weekly snapshot of the positions taken by different market participants in the U.S. futures markets. Published every Friday at 3:30 PM Eastern Time, the COT report reflects positions held as of the previous Tuesday's closing business hours.  Peak Trading Research assesses the latest COT report, examining alterations in price and open interest to provide an appraisal of net fund positioning daily.

• Corn and Feeder Cattle are at their highest hedge fund position estimates for the past 52 weeks.  Live Cattle and Lean Hogs are near their highest.
• Chicago Wheat and Soybean Meal is at their lowest hedge fund position estimates over the past 52 weeks.

• Both Corn and Feeder Cattle have been above their highest hedge fund position levels since mid to late November.  Hedge funds have continued to increase positions for most of the past 8 weeks.

• Wheat has just recently reached its lowest hedge fund level this past week.  Soybean Meal has been bouncing below its lowest level for the past 6 weeks.

Technical Analysis

• Feeder Cattle broke out to new highs in early January and continued to make a new high last week while gaining just under 3%.  Index rebalancing has contributed to the recent strength which will abate mid to late this week.
• Corn broke through the downward trendline in late November and has closed higher 7 of the past 8 weeks.  Despite this breakout, there is a disconnect between the record hedge fund positions and the front month market prices.

• Wheat has been drifting lower since May and is currently very near a multi-year low.  
• Soybean Meal has been riding down the channel since late 2023.  The recent price action has been more bullish and a breakout from the channel is looking more and more likely.

More Information

Use coupon code “SpreadEdge” and get the Weekly Newsletter and Daily Alerts for $1 for the first month.  For a limited time, you can receive my Futures Training Videos for free with a 3-month, 6-month, or 12-month subscription.

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The SpreadEdge Weekly Newsletter is published every weekend and provides a broad overview of the important seasonal, technical, and fundamental indicators within the Energy, Grains, Meats, Softs, Metals and Currency markets.  In addition, spread trade recommendations and follow-up on open trades is also provided.  For a free copy of the Weekly Newsletter, please send an email to info@SpreadEdgeCapital.com

Darren Carlat

SpreadEdge Capital, LLC

(214) 636-3133

Darren@SpreadEdgeCapital.com

www.SpreadEdgeCapital.com

Disclaimer

SpreadEdge Capital, LLC is registered as a Commodity Trading Advisor with the Commodity Futures Trading Commission and is an NFA member. Past performance is not indicative of future results. Futures trading is not suitable for all investors, The risk associated with futures trading is substantial. Only risk capital should be used for these investments because you can lose more than your original investment. This is not a solicitation.