COT Report

Commitments of Traders report — a weekly CFTC publication showing the aggregate futures and options positions held by different categories of market participants.

The Commodity Futures Trading Commission (CFTC) publishes the COT report every Friday afternoon, reflecting positions as of the prior Tuesday. It categorizes traders into three groups: "Commercial" hedgers (producers and consumers who use futures to hedge physical exposure), "Non-Commercial" large speculators (hedge funds and managed money), and "Non-Reportable" small speculators. Each group's long, short, and spreading positions are disclosed for all major futures markets.

COT data is a popular tool for contrarian analysis. When non-commercial speculators (large traders) reach historically extreme net long positions in a commodity, it may signal that the easy money has been made and a correction is due — there is little remaining speculative buying power to push prices higher. Conversely, extreme net short positioning by speculators can signal that the pessimism is overdone and a short squeeze or recovery rally is possible.

The commercial hedger data is considered the "smart money" — producers and consumers understand the physical market fundamentals better than financial speculators. When commercials are heavily hedging short (locking in sales), they may be signaling that they believe current prices are high and they want to lock them in. When they reduce hedging, they may believe prices will rise further. Combining COT positioning analysis with price action and fundamental supply/demand data creates a more complete picture of futures market conditions.

This definition is for informational and educational purposes only. Nothing on Finance Compass constitutes financial, investment, or trading advice. Always conduct your own research and consult a qualified professional before making financial decisions.