Coffee COT Brief: Week Ended 2026-09-18

Executive summary

Speculative and commercial positioning in Coffee futures (KC) saw a modest reduction in risk this week. Managed Money pared back their net long position, primarily by liquidating existing longs, though they remain significantly bullish. Concurrently, Producer/Merchants reduced their net short hedge, buying back more short contracts than they sold. Overall market participation continued to shrink, with open interest declining further from the highs seen earlier in the year, suggesting capital is exiting the market. The lack of accompanying price data makes it difficult to ascertain the catalyst for these positioning shifts.

Positioning

• Managed Money (Funds): Held a net long position of +20,661 contracts. This is a reduction from last week's +22,109 contracts and is significantly below the +35,000 contract peak seen earlier in the year, but it remains a firm bullish stance.
• Producer/Merchants (Commercials): Maintained a net short position of -20,446 contracts. This represents a smaller hedge than the prior week's -22,668 contracts and is well below the >30,000 contract net short seen in mid-August.
• Swap Dealers: Remained net long at +3,568 contracts, a slight increase in their position.

Flows and week-over-week changes

• Managed Money: Funds were net sellers of 1,448 contracts. This move was characterized by risk reduction, with liquidation of long positions (-1,823 contracts) outweighing modest short-covering (-375 contracts).
• Producer/Merchants: Reduced their net short position by 2,222 contracts. This was achieved by a combination of adding new long positions (+1,060 contracts) and buying back short hedges (-1,162 contracts).
• Overall Market: Open interest fell by 1,678 contracts, indicating a net exit of positions from the market during the reporting week.

Commercials vs speculators

The classic positioning dynamic remains in place, with speculators pitted against commercial hedgers. - Speculators (Managed Money) are positioned for higher prices with their +20,661 contract net long. - Commercials (Producers/Merchants) are positioned for lower prices with their -20,446 contract net short, reflecting producers locking in prices for future output. - The key development this week is the simultaneous reduction in both the speculative net long and the commercial net short, suggesting a decrease in conviction or risk appetite from both sides.

Open interest and participation

• Total open interest now stands at 150,458 contracts. This continues a declining trend from a peak of over 213,000 contracts in June 2026, signaling waning participation.
• Concentration ratios are moderate. The largest 4 traders hold 14.4% of the net short position, while the largest 8 hold 20.7%. This does not suggest an overly crowded trade among the largest participants.

Price context

Price series data was not available for this reporting period. It is therefore not possible to correlate these positioning changes with market price action. We cannot determine if the liquidation of speculative longs was profit-taking into a rally or capitulation during a price drop.

Risks and watchpoints

• Speculative Length: The Managed Money net long position, while reduced, is still substantial at +20,661 contracts. A further downturn in prices could trigger a significant wave of long liquidation, potentially accelerating any sell-off.
• Commercial Hedging: The reduction in the Producer net short position is a trend to watch. If commercials continue to reduce their hedges, it could signal a belief that prices have less upside, or it could reflect changes in physical supply and demand expectations.
• Declining Open Interest: The continued slide in open interest is a bearish signal for trend continuation. It implies that capital is flowing out of the Coffee market, which can make it more difficult for established trends to be sustained.