Derivatives traders “hope, not expect” a swift resolution to COT delays

Traders that look to the provision of key weekly committment of traders data from vital financial exchanges have told Agricensus that they do not expect a swift resolution to the ransomware problems that have denied access to the data.

Both the Chicago Mercantile Exchange and the European Euronext exchange have had to suspend the data releases, which provide vital insights into the mood of major investors on agricultural products. 

Market participants have said they are unsure when the US Commodity Futures Trading Commission (CFTC) will resume the release of the Commitment of Traders (COT) report as a number of reporting firms deal with technical issues resulting from a ransomware attack on ION, a financial trading services group.

The situation is mirrored across the Atlantic where European exchange operator Euronext announced the suspension of its weekly COT report last week.

"My understanding is that European firms were the most affected by this. At this point, we are hoping, not expecting,” Charlie Sernatinger of ED&F Man told Agricensus. 

While the attack, which ION reported on January 31, has been mitigated, other companies responsible for reporting data to the CFTC are still experiencing issues providing timely and accurate data.

"I suspect a lot of the involved parties, be it an FCM, ION or others are saying as little as possible – likely on lawyers' advice,” Grain Service Corporation vice president Diana Klemme told Agricensus. 

Once all trades can be reported the CFTC will release the COT report, according to a February 10 press release - although trade sources have warned that a one-time major release could be more disruptive than a drip-release. 

“It takes time for them to collect data, as they track every futures and option product. We may see a report sometime this week,” senior grain and oilseed commodity analyst at Futures International Terry Reilly told Agricensus. 

“To accommodate the trade, the CFTC should release the weekly report day after day, to ensure there is no sticker shock on prices. A bulk report would not be helpful as the trade tracks weekly changes,” Reilly added. 

Limited

While market participants examine the weekly reports from the CFTC and Euronext each week, there has been agreement that the suspension has had at most a limited impact on trading - and only then on the derivative market.

Traders use the information to gauge the mood of the market - looking for movements in the net position as a measure of how confident investors are that prices of corn, wheat, soybeans and other derivative products could go higher or lower.  

"It doesn’t appear to have had much impact on trading here or in Europe," Larry Shonkwiler at Advance Trading told Agricensus.  

“It has been disruptive for sure, but prices were relatively quiet during the involved days which made the lack of information easier to manage," Klemme added. 

The next CFTC COT report is scheduled for Friday at 1530 Eastern time.

The announcement that the last report would be suspended came just hours before the scheduled release of the report. 

The COT "allows us all to get a snapshot of the market’s composition on a weekly basis and confirms or alters some people’s ideas of what caused prices to move up or down. Without it, we must just guess," Jeff McPike of McWheat Inc. told Agricensus. 

At the last release, for the week ending January 24, the Chicago wheat contract had been in a sizeable net short position - with more people expecting prices to fall than rise - for 30 weeks. 

Corn had just started to rebuild a big net long position, while soybeans remained in a net long but the data had reported fluctuations as the net long increased one week only to fall the next.