Palladium Physical Market Brief: September 3, 2026

Executive summary

Physical delivery demand for the September Palladium contract remains robust, with a month-to-date total significantly outpacing the prior contract month. This strength in the physical market stands in stark contrast to the latest CFTC data, which shows managed money holding a large net short position. This divergence suggests a potential disconnect between paper market sentiment and physical offtake, creating a risk of a short squeeze if physical demand persists.

Delivery intentions (today + MTD context)

• Today's Activity: On September 3, a single delivery notice was issued and stopped for the SEPTEMBER 2026 Palladium futures contract.
• Month-to-Date (MTD): This brings the total for the September contract to 259 notices issued and stopped so far.
• Trend Context: Delivery activity for the September contract has been strong since it began on August 28 (190 notices). The current MTD total of 259 contracts already far exceeds the total of 36 contracts delivered against the entire August 2026 contract, signaling a significant increase in demand for physical settlement this cycle.

Warehouse stocks

CME/NYMEX does not publish official daily warehouse stock levels for registered Palladium. Therefore, delivery intentions are the primary public data source for tracking physical market tightness on the exchange.

COT cross-check

The most recent Commitments of Traders (COT) report, dated August 28, highlights a significant divergence between speculative positioning and physical market activity. - Managed Money: Speculators (Managed Money) held a large net short position of -5,499 contracts (4,486 long vs. 9,985 short). - Positioning vs. Physicals: This bearish paper positioning is at odds with the strong physical demand seen in the 259 delivery notices taken so far for the September contract. While speculators are betting on lower prices, commercial participants are actively taking delivery of the physical metal.

Risks and watchpoints

• Short Squeeze Potential: The primary risk is a short squeeze. A large speculative net short position combined with strong physical offtake can create upward price pressure if shorts are forced to cover their positions in a tight market.
• Continued Deliveries: Monitor if the pace of delivery notices for the remainder of the September contract continues. Sustained demand would reinforce the theme of physical market tightness.
• Next COT Report: The next COT report will be critical to see if managed money has begun to reduce its large net short exposure in response to the ongoing strength in the physical delivery market.