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I would like to extend on the COT and I would appreciate Myrrdhin if you are more specific on which aspects exactly do you based on to say that the COT is bullish for OJ and Coffee C. I am certainly less advanced than you on this matter as I do not see anything remarkable there.
I add 5-Year Percentile of Net Position (Adjusted for OI) on a 3 year period (last Friday data) and 1 year COT (this Friday data) graphs on both
I would appreciate a more technical discussion...
By my standards only Sugar is to be watched carefully to check what is going to happen in the coming months as the 5-year percentile...was 4% last week propbably less this week and close to lowest points (2% in April 2018 and September 2018 where there was a short-lived but little rebound nevertheless after that) while the fundamental seems to improve (last USDA report).
On Coffee C my positions are currently bullish but in my opinion it will be short-lived and ready to go the other side (up to September-October then again from February 2020 on) particularly if the price goes to 99 or 103
To finish on OJ, I will probably cut my short and wait higher max at 113 to restart my bearish view (based on fundamental and technical analysis) up to October (graph attached weekly). To be honest I don't like so much OJ, I am difficultly executed by my broker (only market orders) and the volatility is quite high and on the contrary the liquidity is quite low (it makes sense...). In the future (from next year on) I will avoid OJ
I consider COT data as bullish in case of commericals being long and specs being short. To influence my trading, short / long positions of specs should be close to record.
To be clear: a record short / long position does not say anything about the time when the move in the suggestd direction will occur. It can take weeks or months or years.
But it says that in case of a fundamental event supporting such move this move might be significant.
In case of OJ, a hurricane approaching Florida might motivate many shorts to liquidate their positions. As everybody wants to liquidate short positions, and few traders want to sell, the result is a large move.
But it does not always happen. Sometimes, extreme COT positions are corrected without large price movements.
Thus, I am waiting for extreme weather (hurricane, frost) in Florida regarding Orange Juice.
I am waiting for frost (not probable) or dryness during blooming period in Brazil or weather problems in Vietnam regarding coffee.
I sold my sugar position a couple of days ago with a small profit when Crude Oil price came down.
Ok I got it.
Except for some very specific commodities and in some specific occasions (precious metals, some softs?) I still have the impression that most of the COT users are more watching the speculators/Money Managers (MM) behaviors and are calling for a bullish COT when the curves crossed (commercials and speculators) and when the MM continues to increase their long positions and at the same time the OI is as well increasing significantly...(typical example a bullish COT on Brent/WTI when prices last year were around 80-70 respectively)
Maybe you should specify what your are looking for when you say that a COT is bullish, as so far I was puzzled...considering as you wrote that excessive positions of the MM in one direction or the other can last for years (e.g. short positions of the MM on Coffee C with the positive effects of rolling over the contracts with normal backwardation)
PS. Concerning HEQ it is still not a done deal (in fact 85% of the value) and for the rest April-May were horrible for me: gold, silver, OJ, Cotton, Soybeans, Coffee C and Robusta did not go well for me to the point that I am modifying my strategies with options (spread will be an exception and I will focus on less commodities each month)...
I do not consider crossing COT curves (commercials and speculators) as bullish or bearish - they do not influence my trading. If you are interested in my interpretation of COT data you could read the book of Floyd Upperman or have a look at his homepage.
Please feel free to ask in case you are not sure about my comments. But I am writing here for years, and I certainly already have commented on my interpretation of COT data in the past. Thus, I am not always sure what is already known to the readers and what is not.
I agree that it is a good idea to reduce the number of commodities to trade, according to your experience and the time available.
Best regards, Myrrdin
For what it's worth the book has 2.5 stars at amazon review and 54% of buyers that commented on (out of 22 in total) gave one star.
But it is correct that I didn't read his book.
Briese's one has better ratings but similarly I didn't read it.
I understand that the evaluations are average. The book is not easy to read. And the author does not give simple rules how to set up a trade. But he explains the concept of COT.
I found this technical publication that is reflecting my views on the question (the conclusions) https://core.ac.uk/download/pdf/6566076.pdf
One day I will read one or both of the two books...(starting with Briese). Thanks for your feedback and for upcoming discussions...
Coming back to Coffee C. A slowdown at 102 was expected let's see what are the next steps...
Even if I do not manage to sell a put option 90 or 92.5 at a good price for November I like this situation...
I am not anymore in OJ (waiting for 112 or a reversal before to reassess the situation)
In my opinion, coffee will not make new lows until August (beginning of blooming), and orange juice will not make new lows until November.
In both cases the reasons are the same: There are risks coming up, and this risk will be reflected by prices. Only in case all these risks will not result in problems I will consider new lows.
