Palladium Futures COT Report: Week Ending 2026-04-17

Executive summary

Speculative sentiment in Palladium futures shifted less bearish this week, driven by significant short-covering from the Managed Money cohort. Despite this, funds remain firmly net short, setting up a potential for further volatility. Commercial producers, meanwhile, used the opportunity to increase their hedge (short) positions. Overall market participation continues to decline, with Open Interest falling to a new multi-month low, suggesting a lack of strong conviction and potentially thinner liquidity ahead.

Positioning

• Managed Money (Speculators): Funds hold a net short position of -1,808 contracts (4,732 long vs. 6,540 short). While this is still a decisively bearish stance, it marks a significant reduction from last week's net short of -2,541 contracts, which was the most bearish reading in the provided data.
• Producer/Merchant (Commercials): Commercials maintain their typical net short (hedging) position at -1,723 contracts (771 long vs. 2,494 short). This is a more pronounced short position compared to the prior week's -1,250 contracts, but remains significantly less bearish than the -3,921 contract net short seen in late December 2025.
• Swap Dealers: This category holds a substantial net long position of +1,893 contracts (4,409 long vs. 2,516 short), effectively taking the other side of the net short positioning from both speculators and commercials.

Flows and week-over-week changes

• The primary driver of positioning change this week was Managed Money short-covering. They added 193 long contracts while simultaneously cutting 540 short contracts, for a net buying of 733 contracts.
• Producers/Merchants moved in the opposite direction, increasing their net short position by 473 contracts. This was accomplished by reducing longs (-277) and adding new shorts (+196).
• Swap Dealers increased their net long position by 268 contracts, largely by covering short positions (-316) more aggressively than they liquidated longs (-48).
• The overall market saw a decrease in participation, with total Open Interest falling by 539 contracts. This suggests the week's activity was characterized more by position reduction (short-covering) than new risk-taking.

Commercials vs speculators

The classic divergence between commercials and speculators is clear. Speculators (Managed Money) are positioned for price declines with a net short of -1,808 contracts. Commercials are also net short at -1,723 contracts, using the futures market to hedge their physical product against a potential fall in prices. The fact that speculators are now more net short than the commercial hedgers is a notable, albeit not extreme, condition. Swap Dealers are the primary facilitator, holding a large net long that absorbs the selling from these two groups.

Open interest and participation

• Total open interest now stands at 14,648 contracts, a decrease of 539 from the prior week.
• This is the lowest level of open interest in the provided dataset, continuing a steady decline from the peak of 22,061 contracts reported on December 23, 2025. This indicates a significant withdrawal of capital and interest from the Palladium futures market over the past several months.
• Concentration on the short side remains notable. The largest 8 traders hold 47.8% of the net short positions, compared to 39.2% of the net long positions, indicating that bearish bets are held by a slightly more concentrated group of large players.

Price context

Please note: The price series provided ends on April 14, while this COT data is as-of April 17. - The price of Palladium experienced a sharp decline from late February through late March, falling from over $1840 to a low near $1310. - In the weeks leading up to this COT report, prices have staged a significant recovery. The last available price point on April 14 was $1,582.0, well off the March lows. - The substantial short-covering by Managed Money this week (+733 contracts net change) is consistent with this price rally, as funds were likely forced to buy back bearish bets to limit losses or take profits on the bounce.

Risks and watchpoints

• Short Squeeze Potential: While there was significant short-covering this week, Managed Money remains heavily net short (-1,808 contracts). Should the price recovery from the March lows continue, there is ample fuel for a more aggressive short squeeze as the remaining shorts are forced to cover.
• Thinning Liquidity: The continued decline in open interest to multi-month lows is a key concern. Thinner markets can be prone to higher volatility and more erratic price swings on news or changes in order flow.
• Commercial Hedging Pressure: The increase in commercial short positions this week suggests producers may be using recent price strength to re-establish hedges. If this trend continues, it could act as a headwind, providing a source of supply that may cap further price rallies.