Silver Futures COT Brief: Week Ending February 20, 2026

Executive summary

This report reveals a Silver market in a state of reset following extreme volatility. The primary driver this week was significant short-covering from Managed Money, which increased their net long position despite a continued decline in overall market participation. Open Interest has fallen to its lowest level in the provided dataset, indicating a substantial deleveraging after the price crash from late January's highs.

Commercial positioning is a key highlight: Producer/Merchants are holding their smallest net short position in over two months, suggesting a material reduction in hedging pressure at current price levels. Conversely, Swap Dealers increased their net short exposure. The price action during the reporting week was firm, aligning with the speculative short-covering dynamic. The market appears to have washed out speculative excess, but a lack of new long initiations suggests conviction remains tentative.

Positioning (net, extremes vs recent weeks)

• Managed Money: Net long position increased to +5,968 contracts from +4,569 the prior week. This is a notable shift, but the overall position remains extremely light compared to the +21,887 contract net long held in late December and levels above +13,000 seen through January.
• Producer/Merchant (Commercials): Net short position shrank to -15,883 contracts. This is the smallest net short held by this category in the entire provided dataset (going back to late Dec 2025), significantly below the peak short of -26,074 contracts in early January.
• Swap Dealers: Net short position expanded to -26,464 contracts, taking the other side of much of the market's net length.

Flows and week-over-week changes

• The dominant flow was from Managed Money, who covered 1,500 short contracts while barely touching their long side (a reduction of only 101 contracts). This resulted in a net position change of +1,399 contracts, almost entirely due to short-covering.
• Producer/Merchants also reduced their net short exposure, buying back 502 short contracts and adding 405 long contracts for a net change of +907.
• Swap Dealers absorbed this flow by increasing their net short position by 1,091 contracts (selling 813 longs and adding 278 shorts).
• Non-reportable positions (often smaller retail traders) showed a bearish tilt, reducing longs by 1,329 and shorts by 465 contracts.

Commercials vs speculators

The classic dynamic between commercials and speculators persists, but with important nuances: - Speculators (Managed Money) are net long, but their position is a fraction of its recent peak. The recent increase in net length is not from new bullish conviction but from closing out bearish bets. - Commercials (Producer/Merchants), the natural hedgers, are carrying their lightest net short position in months. This suggests that at current prices, producers see less need to hedge future production, potentially indicating they view downside risk as more limited or are waiting for higher prices to re-engage. This reduction in "natural" selling is a supportive factor.

Open interest and participation

• Total Open Interest (OI) fell again, by 2,145 contracts, to 131,496. This is the lowest OI level in the provided data series, down sharply from a peak of over 157,000 contracts in early January.
• The consistent decline in OI since late January confirms that the recent price volatility resulted in a significant liquidation and exit of capital from the Silver market. The current rally is occurring in a shrinking, not expanding, market.
• Concentration on the short side remains significant, with the largest 4 traders holding 26.9% of the net short position, compared to 11.8% on the long side.

Price context

• The price series provides critical context for the positioning data. The massive rally from ~$71 in late December to a peak of over $117 on January 29th was followed by a collapse to $70.40 on February 6th.
• The positioning data reflects this perfectly: Managed Money net length was at its highest during the run-up, and the subsequent crash coincided with a dramatic reduction in their position and a collapse in Open Interest.
• During this reporting week (Feb 17-20), the price of silver recovered from $75.35 to $80.605. This price strength aligns directly with the week's dominant positioning flow: short-covering from the Managed Money category.

Risks and watchpoints

• Upside Risk: The market is significantly "cleaner" after the speculative washout. With commercial hedging at a multi-month low and speculative length far from extreme, there is room for a more sustainable rally if a catalyst emerges. Continued short-covering could provide further fuel.
• Downside Risk: The rally is being driven by the closure of old shorts, not the initiation of new longs. This type of rally can be fragile. Furthermore, the continued decline in Open Interest signals a lack of new capital entering the market. If short-covering peters out without new buyers stepping in, prices could easily re-test the recent lows.
• Key Watchpoint: Monitor Open Interest. A change in trend from falling to rising OI alongside increasing prices would be a strong signal that new, convicted buyers are entering the market, adding a more durable foundation to the price recovery. Also, watch for Commercials to begin selling/hedging more aggressively, which would likely cap a rally.