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Re: Arabica and Robusta COT Report
Hello Nikhil. Welcome to the forum. As you know, there are many factors that can influence prices, such as, weather conditions, currency, fundamentals and technical behavior. The accumulation of large positions by any particular group, such as, large traders, swap dealers, funds, commercials and even small traders can have an impact on prices as well. What we are seeing presently is a very large build up of shorts in a very brief time with little affect on the market. The reason why prices have not been greatly affected is because commercials have been buying whatever the funds are selling. New selling has been going to the very strong hands of the commercials who are mostly buying against options and for consumption related reasons.
The implication that I refer to is that selling of such magnitude by a speculative group has created a sensitive situation, a very sensitive one, imo. As the trading community sees this build up it will likely construe it as bullish causing prices to rise. At some point, the funds will reach a level where they will begin to cover. Of course, I can be entirely wrong. There are several other factors that can be at play. For now the market is higher and steady which could be for an entirely different reason than the COT. Ultimately, reasons are not as important as what the market itself is saying. I hope that I have answered your question. Good Trading.