Palladium COT Report: Week Ending October 2, 2026

Executive summary

The CFTC Commitments of Traders report for Palladium (PA) for the week ending October 2, 2026, shows an aggressive surge in speculative short positioning. Managed Money traders expanded their net short position by 1,956 contracts to -7,962 contracts, reaching new multi-month net short extremes. Gross speculative short positions climbed to 11,702 contracts, accounting for 62.9% of total open interest. Concurrently, total open interest expanded by 1,872 contracts (+11.2%) to 18,602 contracts, signaling that fresh speculative capital entered the market on the short side rather than gains being driven purely by long liquidation.

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Positioning (net, extremes vs recent weeks)

• Managed Money: Net position stands at -7,962 contracts (3,740 longs vs. 11,702 shorts), an expansion from -6,006 contracts the previous week. This marks the deepest net short position across the provided historical sample (surpassing the previous lows of -6,617 in late July 2026 and -6,381 in early July 2026).
• Managed Money Gross Extremes: Gross shorts at 11,702 contracts represent a series high (up from 10,034 contracts on September 25 and 9,961 on September 18), while gross longs contracted to 3,740 contracts (20.1% of open interest).
• Swap Dealers: Net long position expanded to +4,794 contracts (7,054 longs vs. 2,260 shorts), up from +3,900 contracts last week, approaching their highest net long posture seen in mid-July (approx. +4,000 to +4,200).
• Producer/Merchant: Net short exposure narrowed sharply to -97 contracts (1,244 longs vs. 1,341 shorts), compared to -669 contracts last week and well off the heavier net short exposure seen earlier in the year (-3,921 in December 2025).

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Flows and week-over-week changes

Total open interest rose by 1,872 contracts week-over-week. Key category flows:

• Managed Money:
  • Longs: -288 contracts
  • Shorts: +1,668 contracts
  • Spreading: +126 contracts (to 851 contracts)
• Swap Dealers:
  • Longs: +875 contracts
  • Shorts: -19 contracts
  • Spreading: -1 contract (to 85 contracts)
• Producer/Merchant:
  • Longs: +353 contracts
  • Shorts: -219 contracts
• Other Reportables:
  • Longs: +747 contracts (to 2,658)
  • Shorts: +83 contracts (to 521)
  • Spreading: +25 contracts (to 210)
• Nonreportable (Small Traders):
  • Longs: +35 contracts (to 2,760)
  • Shorts: +209 contracts (to 1,632)

The dominant weekly dynamic was heavy speculative short selling (+1,668 managed money shorts) met primarily by Swap Dealer (+875 longs) and Other Reportable (+747 longs) absorption.

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Commercials vs speculators

+--------------------------+----------------+----------------+----------------+
| Category                 | Gross Long     | Gross Short    | Net Position   |
+--------------------------+----------------+----------------+----------------+
| Managed Money (Spec)     | 3,740 (20.1%)  | 11,702 (62.9%) | -7,962         |
| Swap Dealers             | 7,054 (37.9%)  |  2,260 (12.1%) | +4,794         |
| Producer/Merchant        | 1,244  (6.7%)  |  1,341  (7.2%) |    -97         |
| Other Reportables        | 2,658 (14.3%)  |    521  (2.8%) | +2,137         |
| Nonreportable            | 2,760 (14.8%)  |  1,632  (8.8%) | +1,128         |
+--------------------------+----------------+----------------+----------------+

• Divergence: Commercial and intermediary entities (Swap Dealers) are heavily positioned long (+4,794 contracts net), functioning as the primary counterpart to Managed Money funds who hold nearly two-thirds (62.9%) of all short open interest.
• Producer Hedging: Commercial producers/merchants hold minimal net directional exposure (-97 contracts), having covered gross short commitments down to 1,341 contracts from over 4,500 contracts in late 2025.

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Open interest and participation

• Total Open Interest: 18,602 contracts (+1,872 WoW).
• Trader Breadth: Total trader count increased to 172 (up from 152 in the previous week and 155 on September 18).
  • Managed Money short participants grew to 40 traders (up from 36 last week and 19 earlier in the year).
  • Managed Money long participants edged up slightly to 33 traders (from 32).
• Top-Trader Concentration:
  • Top 4 Traders: Account for 27.0% of gross longs and 29.5% of gross shorts (net: 26.7% long, 28.0% short).
  • Top 8 Traders: Account for 38.6% of gross longs and 44.9% of gross shorts (net: 38.3% long, 43.4% short).
  • Short-side concentration remains elevated, reflecting the clustered nature of institutional short positions.

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Price context

Note: Daily settlement data is available through September 28, 2026; price data for September 29 through October 2 is absent from the provided quote feed.

• Price Trend: Front-month Palladium futures peaked at $1,435.50/oz on August 28, 2026, before embarking on a sustained downtrend throughout September:
  • September 4: $1,390.00
  • September 11: $1,319.00
  • September 18: $1,305.00
  • September 25: $1,266.00
  • September 28: $1,209.00
• Technical & Flow Interaction: The price breakdown from the mid-$1,300s to $1,209.00 coincided directly with managed money rebuilding large gross short exposure (from ~9.2k contracts in early September to 11.7k contracts currently) and open interest expanding on the decline.

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Risks and watchpoints

• Short-Covering / Squeeze Vulnerability: With Managed Money gross shorts at 11,702 contracts (62.9% of open interest) and net positioning at multi-month extremes (-7,962 contracts), the market is heavily asymmetric. Any sudden supply disruption or technical reversal could trigger rapid short covering.
• Trend Continuation on Inflows: The week-over-week surge in open interest (+1,872 contracts) confirms that funds are actively initiating short positions rather than merely trailing existing trends. A break below recent lows could invite further systematic trend-following short allocations.
• Commercial Support: Swap Dealers have absorbed significant volume, expanding longs to 7,054 contracts (37.9% of OI). Watch whether commercial and swap buying continues to absorb speculative selling or if dealer limits force price capitulation lower.