Am glad I am hedged my open profits and did Call credit spreads, 60 cents down, need this market to drop at least buck and half to add more to my Longs in futures. I learned long ago, that Commercials seldom lose money, so why not trade like them.
When I learned that 99.99% of traders or investors didn't like or didn't want to bother with the COT, I got interested. That is contrarian thinking, isn't it?
Fonz, you've seen my charts on the previous page? You thinking a short? sugar seems to almost perfectly correlate with the Brazilian Real - just a thought on the COT, does the COT influence the price.... or is the Brazilian Real influencing the COT which in turn influences the price. No matter, it seems we're at extremes at the moment.
When the commercial COT Index is at 0 (and bouncing on that 0 few weeks in a row) and when Commercials are more short than they were the past 5 to 7 years, and when statistically Sugar prices are going down by the end of July, I will bet that all the others will realize in the next 2 to 4 weeks, that the uptrend is over, looking at Charts or news. It take times to get rid of enormous positions. And the COT doesn't influence the price, it is just a refection of who did what.
I don't see how the blue commercial interest line has any more ("predictive") value than price itself. If you used it for timing purposes, consider how many times you would have gotten it wrong just on this very chart alone, irrespective of whether you used it as a contrarian or positive indicator.
This is how I will build a position, because of what I said before (which is not about the blue line) and because of S/R : Now the SB is at 20.33. 18.50 will be the catalyst for (shorts) Chartists. If it goes beyond 16.50 which I think, it should have some (bad) news around it, which should be the catalyst for "fundamentals". 1st try = I will short, just before the end of a Day, when the price is between 22 and 21. My stop will be at 23.50 (1 point = $1120...) I will post my actual trades.
I took a course by the guy who first developed COT, Curtis Arnold, then Steve Briese bought all rights or research, don't remember, then took one day course in Chicago long ago in 1992, with Briese, it was a little different but the same. He had gone over some things that are actually opposite of what makes sense about Sugar and I think also OJ, I had also went to handful of Commercials applying for trading jobs, but was a way into trading offices for few hours, didn't really wanted a job, just wanted to see what they did. But the Commercials then didn't use COT, so never saw the point to add. So my Long Term approach started 1991-ish, and it evolves to this day, only now I am more aggressive back testing more entries, am very happy that it is automated. But we all have our own approaches which is cool.
I use stats and COT for "real" commodities only. I believe that they still are impacted by hedging and natural cyclical events. I automatize 90% (of what can be automatized and back tested) for short term Stock, ES and YM trading. From Agrimoney : "The significantly higher sugar production that is expected in Brazil is likely to see more sugar supply reaching the market from Brazil in the coming months," the bank said. It noted expectations from official Brazilian crop bureau Conab of a 3.0m-tonne rise to 34.3m tonnes in sugar output from the country's key Centre South region in 2016-17. "Nationwide, 11% more sugar cane is expected to be turned into sugar than last year." The bank forecast a "somewhat-lower sugar price of 17.5 cents per pound by year's end", although it reassured that a further decline was unlikely, saying that "the anticipated supply deficits are likely to preclude any more pronounced price slide".
Not that I think the COT has any real value, but why would the commercials bother with it? Isn't it supposed to be a (delayed) glimpse for outsiders into what the commercials are doing? The commercials already know what they're doing; they've already done it.