Funds are still covering but this week it is mostly index funds as we approach rebalancing late next month for 2020. Other short buyers were commercials who likely bought on the sharp drop on the 19th. It was mentioned in the market report of that day that there was strong downside support as the market dropped. It looks like that upside resistance was provided by mostly new selling by Swap Dealers. Large traders were sellers of longs and new shorts. Small traders sold longs and bought shorts, likely in the form of spreads. It appears that Commercials were active in spreads but the greater activity was in EFP/EFS as hedged positions on both sides were exchanged for customized physical, bypassing delivery on ICE. There continues to be little evidence of origin selling but it doesnt mean that it is not taking place. Although the far forwards have not been too active the middle months like Dec and March are. There is outright buying of spreads by different sector mixed with outright selling possibly by origin.
In Robusta, the outright changes are more profound. Large traders mimicked KC but to a much greater degree. Commercials sold mostly longs in a big way and funds covered aggressively. Regardless how we look at the COT, funds are covering as shorts are moving from managed money to large traders and swap dealers. Whatever the COT reveals, we can be sure that all sectors are active on both sides.
The expectations of this market are mixed but there are certainly bullish situations taking place. Funds are buying, and, imo, itís particularly significant that index funds are doing so. Commercials are prepared to buy on sharp drops. Shorts are being added by other sectors. Still, there is a reluctance to stay long. The Real is low even if it isnít dropping. The CPeso is also low and weak. South American countries are all being tested. Trade reconciliations continue to be a question mark, etc. At the same time, the USDA has lowered production estimates, weather continues to be less than ideal and stocks continue to drop as exports rise. Your opinion is certainly welcomed.