Bearish Copper and Soybeans Signal Weaker Prices Ahead

Copper and soybeans have reached record levels of bearish positioning in the market. According to COTbase.com, copper's commercial and large speculator net positions have hit all-time lows, with a warning that this type of setup can lead to weaker prices ahead.

The main exception to this is commercial capitulation, where physical-market hedgers are forced to reduce their positions due to rising market pressure. This can extend the rally and make the COT extreme look even more dramatic before the conventional bearish reaction appears.

Natural Gas, on the other hand, remains in a historically bullish position, with large speculator net positions reaching 339 reports and commercial net positions reaching 342 reports. However, this does not necessarily mean that prices will move up immediately, as seen in 2020 when a similar bullish extreme appeared months before the market began a larger move higher.