Watch Money Flow
What’s Happened….
A method to monitor a market’s strength or weakness is to know who is in the market. Each Friday the CFTC (Commodity Futures Trading Commission) releases a report titled the Commitment of Traders. This report reveals who the different participants are in a particular market (such as corn) through the previous Tuesday. Both long and short positions are combined to provide a net. To keep this perspective rather simple, there are three major categories. They are commercial, managed money (large speculators), and non-reportable.
Commercial firms are those who are positioned to either make or take delivery. They usually trade opposite the physical commodity. As an example, a large commercial hedge position that is net short corn futures would suggest commercials hold a lot of actual inventory. They have hedged their holdings (corn on hand) or future holdings – corn that is contracted and not yet delivered. This could be interpreted as a potential bearish signal.
Large speculators are often viewed as investors who believe a price will move in a certain direction. Whether their analysis is based on supply and demand or otherwise, such as technical signals, it really does not matter. The key is to know that the speculative sentiment (bullish or bearish) is biased on the net of longs (buy) and short (sell) positions and whether this net is changing.
Non-reportable positions are considered small speculators. This would typically be individuals who may have interest in a market either through hedging or speculating where the number of contracts held is not large enough to require the need to report. Reporting occurs when a trader’s position meets or exceeds specific CFTC thresholds at the close of the market on the previous Tuesday.
Why this is Important…
The COT report can be viewed as a tool to help make marketing decisions. Knowing who is in the market, and perhaps why, can help crystallize a view of your decision-making process. If managed money is aggressively bought, as has been the case so far in 2026, this would suggest speculative interest believes prices will move higher. Buying decisions could be based on fundamental (supply and demand) or on technical activity (chart activity). In either case, when speculative buying interest reaches near all-time high levels, an awareness that a potential change in price trend could be close. If money managed (funds) begins to leave at one time, it could mean a fast and potentially large price drop, as the market is overwhelmed with selling. Just the knowledge of a large buildup of long speculative positions is powerful. This might lead to a change in your marketing technique. It may be time to make less cash sales and a time to buy put options. Purchasing put options provides a price floor against lower futures price and yet allows unpriced cash grain to participate in a rally.
What can you do about it?
Monitor the weekly COT report and get a feel for overall trends. Your advisor can also do this for you. Work together to come up with a strategy. The bottom line is to look for potential extremes such as record longs or shorts. Ask yourself: Is the money adding to new positions and beginning to exit? Are prices vulnerable to a sharp move? Marketing is a never-ending job of learning, evaluating, and executing. It never takes a day off. Arming yourself with additional tools in your marketing toolbox can be helpful to the decision-making process that marketing requires.
Find out what works for you…
Work with a professional to find the strategy or strategies that are best suited for your operation. Communication is important. Ask critical questions and garner a full comprehension of consequences and potential rewards before executing. The idea is to make good decisions for the operation and less emotionally-charged responses to market moves, which are always dynamic.
About the Author: With the wisdom of over 36 years at Total Farm Marketing and following across the Grain Belt, Bryan Doherty is deeply passionate about his clients, their success, and long-term, fruitful relationships. As a senior market advisor and vice president of Brokerage Solutions, Doherty lives and breathes farm marketing. He has an in-depth understanding of the markets and marketing tools, an excellent listener, and communicates with intent and clarity to ensure clients are comfortable with their decisions.
The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Examples of seasonal price moves or extreme market conditions are not meant to imply that such moves or conditions are common occurrences or likely to occur. Futures prices have already factored in the seasonal aspects of supply and demand. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc. Presented for solicitation.
Author
Bryan Doherty