Copper slashes 16,000 long positions in one go; precious metals collectively reduce leverage—Is the capital really leaving or just pretending to be cautious?

FX168 Finance, September 19——This week, the biggest move by speculative capital was to scale back. Precious metals reduced positions, crude oil retraced, and soft commodities withdrew; all are defensive moves. The internal split within US Treasuries is the most intriguing, with aggressive covering of shorts in the short and medium end, while the long end continues to add shorts. Among agricultural products, soybeans stand out as strong, while wheat is under siege by shorts. Overall, the market is shuffling between interest rates, risk aversion, and commodities, with a wait-and-see mood overpowering offensive intentions.

On Saturday (September 19), the latest CFTC position data showed that for the week ending September 15, leading overseas institutions as a whole reduced speculative positions. All precious metals saw leverage come down—gold’s net-longs fell back to around 137,000 lots, with copper seeing the largest cut. Crude oil bulls made slight pullbacks, and natural gas shorts continued to converge. US Treasuries showed a clear split internally—massive short covering in the short and medium-term, while ultra-long shorts kept on increasing. Within agricultural products, soybeans and corn net-longs strengthened, wheat shorts expanded sharply, and soft commodities as a group weakened. Capital’s wait-and-see sentiment increased, with risk-aversion and rebalancing coexisting.

Precious Metals: Leverage Slashed Across the Board, Copper Retreats the Most

Gold speculative net-longs decreased by 2,488 lots, down to 137,060 lots. Silver net-longs decreased by 1,544 lots, to 12,632 lots. Copper saw the largest decline, with net-longs slashed by 16,476 lots in one go, dropping to 65,541 lots.
Commentary: All three lines reduced positions simultaneously, with capital collectively letting go of metals. Copper was hit the hardest, as previously crowded longs actively made way for risk aversion and profit-taking overlapping.

Energy: Mild Pullback in Crude, Natural Gas Shorts Converge

WTI crude speculative net-longs decreased by 531 lots to 139,515 lots—a rather restrained move. Natural gas net-short positions across the four major markets fell by 153 lots, reaching 54,263 lots.
Commentary: Crude oil bulls only made a mild retreat, without any panic selling. Natural gas is more noteworthy, as short positions have consecutively narrowed, indicating that bearish funds are gradually exiting.

Forex: Yen Stands Strong Alone, European Currencies Decimated

Yen speculative net-longs are as high as 120,359 lots, the only gathering spot for bulls among non-USD currencies. The pound net-short stands at 58,715 lots, franc net-short at 28,988 lots, and euro net-short at 26,993 lots.
Commentary: Almost all non-USD currencies are suppressed by shorts, with the European bloc particularly weak. The yen alone maintains a bullish position, reflecting risk-averse capital’s clear preference.

US Treasuries: An Integrated Overview First

Looking at the whole picture, US Treasury futures' overall net-shorts increased by 2,640 lots to 203,157 lots. Comprehensive positioning indicates capital remains broadly betting on a weaker bond market, with no change in direction.
Now looking at the breakdowns: 2-year net-shorts reduced by 73,754 lots, down to 855,353 lots. 5-year net-shorts saw a massive short covering of 270,127 lots, to 997,366 lots. 10-year net-shorts decreased by 13,547 lots, to 821,236 lots. Only ultra-long net-shorts increased slightly by 63 lots, reaching 345,203 lots.
Commentary: Overall Treasury shorts are still accumulating, but with internal divergence. The short and medium-term shorts are covering on a large scale, led by the 5-year, as capital rushes to the exit. Ultra-long shorts stick to their guns, resulting in bets at both ends of the curve heading in completely opposite directions.

Agricultural Products: Grains Strengthen, Soft Commodities Weaken

Corn net-longs increased by 1,056 lots, to 291,953 lots. Soybean net-longs surged by 10,366 lots, to 172,981 lots. Wheat, on the other hand, saw net-shorts spike by 24,851 lots, to 42,097 lots. Soft commodities as a whole weakened: cotton net-longs dropped by 7,231 lots, to 80,676 lots; sugar net-longs decreased by 584 lots, to 105,531 lots; coffee flipped directly to net-short by 1,716 lots, and cocoa net-shorts increased to 19,396 lots.
Commentary: Grains and oilseeds show a bullish bias, with soybeans being the star. Wheat’s short surge diverges from the overall sentiment in grains. Soft commodities are bleeding across the board, with funds clearly withdrawing from such varieties.

This week, the biggest move by speculative funds was to scale back. Precious metals reduced positions, crude oil retraced, and soft commodities withdrew; all are defensive moves. The internal split within US Treasuries is the most intriguing, with aggressive covering of shorts in the short and medium end, while the long end continues to add shorts. Among agricultural products, soybeans stand out as strong, while wheat is under siege by shorts. Overall, the market is shuffling between interest rates, risk aversion, and commodities, with a wait-and-see mood overpowering offensive intentions.

Frequently Asked Questions

Q1: Why are US Treasury short and medium-term shorts covering massively, while the long end keeps adding to shorts?
This reflects two views at different points on the yield curve. The short and medium end is more sensitive to monetary policy expectations, and short covering means funds are racing ahead of expected policy shifts. The ultra-long is more sensitive to inflation and fiscal factors, with continuous shorting suggesting there are still funds betting long-term rates won’t come down. The opposite positioning at both ends of the curve highlights a widening divergence on the market’s outlook for future policy.

Q2: With all precious metals reducing positions, does that mean gold is in trouble?
A reduction in net-longs doesn’t mean a bearish outlook, just that bulls are cutting exposure. Gold net-longs retreating to around 137,000 lots is still in a bullish region. Copper’s biggest reduction of 16,476 lots shows an overall contraction in the metals sector, largely a result of risk aversion and profit-taking combined, without enough evidence of a directional reversal. Position data reflects fund activity, not a decisive market view.

Q3: Why is the yen the only non-USD currency holding a bullish position?
The yen is a classic safe-haven currency globally; the concentration of bulls indicates funds seeking a haven there amid rising uncertainty. The euro, pound, and Swiss franc are all under heavy short pressure, especially the European bloc. This contrast is itself a vivid reflection of capital’s risk preference.

Q4: What does the convergence of natural gas shorts mean?
A reduction in net-shorts by 153 lots indicates previous bearish bets exiting. Shorts closing out in batches is usually seen as growing doubt over a sustained drop, but the decline is modest; the absolute number of shorts is still over 54,000 lots, so it’s just a cooling off of bearish sentiment, not a bullish turn.

Q5: Why is there such a rift among agricultural products?
Soybean net-longs increased by over 10,000 lots, corn remains strong, and grains and oilseeds are favored by capital. Wheat, however, saw net-shorts expand by 24,000 lots, weakening against the general grain sentiment. Soft commodities are losing capital across the board, with coffee even flipping to net-short. Capital in agricultural products is becoming more selective, concentrating only on a handful of strong varieties.