Palladium Futures Positioning - Week Ending 2026-02-20

Executive summary

This report covers positioning changes in the NYMEX Palladium futures market for the week ending February 20, 2026. The market saw a period of quiet consolidation with very minor shifts across all major categories. Speculative funds (Managed Money) hold their most net long position in over two months, while Commercials (Producer/Merchant) have reduced their net short to the lowest level in the same period. Overall market participation, as measured by Open Interest, remains subdued near recent lows, suggesting a lack of strong directional conviction despite the increasingly bullish tilt from speculators and reduced hedging from producers.

Positioning

• Managed Money: Speculators hold a modest net long position of +533 contracts (5,589 long vs 5,056 short). This is the largest net long position for this category in the provided historical data (dating back to December 2025), representing a significant shift from the net short positions held for much of January.
• Producer/Merchant: Commercials maintain a significant net short position of -2,666 contracts (756 long vs 3,422 short). While still structurally short, this is the smallest net short position held by this group in the provided data, down from a peak net short of -3,921 contracts in late December. This suggests a notable reduction in producer hedging activity.
• Swap Dealers: This category is net long +1,032 contracts (5,034 long vs 4,002 short). This is a mid-range reading compared to the past two months, where their net long position peaked at +2,139 contracts in early January.

Flows and week-over-week changes

The reporting week was characterized by minimal activity and position squaring rather than new directional bets. * Managed Money: Funds slightly increased their net long position by a negligible +11 contracts. This was the result of minor liquidation on both sides, with longs decreasing by 17 contracts and shorts decreasing by 28 contracts. * Producer/Merchant: Commercials covered a small portion of their net short, with the position shrinking by 31 contracts. This came from an increase in both long (+95) and short (+64) positions. * Swap Dealers: Added marginally to their net long position by +40 contracts, increasing longs by 106 and shorts by 66 contracts.

Commercials vs speculators

The classic positioning dynamic is in place, with commercials net short and speculators net long, but recent trends are notable. * The speculative camp, led by Managed Money, has fully rotated from a net short stance of -543 contracts at the end of January to a net long of +533 contracts now. This marks a clear shift in sentiment. * Conversely, the commercial camp's net short position has contracted significantly, from -3,479 contracts at the end of January to the current -2,666 contracts. This reduction in hedging pressure from producers is a potentially supportive factor for prices, as it removes a key source of structural selling from the market. The divergence is clear: as speculators have become more bullish, commercials have become less bearish.

Open interest and participation

• Open Interest: Total open interest stands at 16,789 contracts, a marginal increase of 251 contracts from the previous week. However, this is significantly below the peak of 22,061 contracts seen in late December 2025 and remains near the lowest levels of the past two months. The low participation suggests a tentative market awaiting a catalyst.
• Concentration: The market shows a notable concentration on the short side. The largest 4 traders hold 33.2% of the net short positions, while the largest 8 hold 47.8%. This is considerably higher than the long side concentration (23.6% for the top 4 and 37.1% for the top 8), highlighting that a few large players dominate the sell-side.

Price context

Note: The available price series data ends on February 13, 2026, one week prior to the 'as of' date of this positioning report. Analysis is based on the price action leading up to the prior week.

The price of Palladium experienced extreme volatility in late January and early February. After peaking at $2150.0 on January 29th, the front contract plunged to a low of $1567.5 by February 6th. This sharp decline coincided with a major short-covering rally among Managed Money participants, who flipped from net short to net long during that period. The price then staged a significant recovery, closing at $1732.0 on February 13th. The very muted positioning changes in this week's report (for the week ending Feb 20th) suggest the market entered a consolidation phase following that sharp rebound.

Risks and watchpoints

• Speculative Extreme: While the absolute size of the Managed Money net long position (+533) is not large, it represents a relative bullish extreme for this group over the past several months. This makes the market vulnerable to a wave of long liquidation should prices fail to follow through to the upside.
• Reduced Commercial Hedging: The shrinking producer net short position is a key development. If this trend continues, it would remove a major headwind for prices. Monitoring whether commercials begin to re-establish hedges at higher prices will be crucial.
• Low Open Interest: The low overall market participation could amplify the impact of any new capital inflows or outflows. A market with low liquidity can be prone to sharper, more volatile price swings.
• Data Lag: The one-week lag between the latest price data and this COT report is a limitation. The market's behavior during the week of February 16-20 is unknown and could have influenced the minor positioning shifts observed.