Coffee C Futures COT Brief: Week Ending 2026-02-20

Executive Summary

This week's report was dominated by a massive liquidation event, with total open interest plummeting by 18,399 contracts. This exit was led by the Producer/Merchant category, which drastically reduced both long and short positions, suggesting a significant decrease in hedging activity rather than a new directional view. Managed Money speculators continued to pare back their bullish stance, with their net long position falling to its lowest level in the provided data series. Swap Dealers absorbed some of this flow, flipping from a small net short to a net long position. The broad-based exit from the market signals a period of significant risk reduction and position squaring among key participants.

Positioning

• Managed Money (Speculators): The net long position for Managed Money now stands at +18,072 contracts (37,629 long vs. 19,557 short). This represents a continued reduction from a peak net long of +35,947 contracts seen on Jan 30 and is the least bullish they have been in over two months.
• Producer/Merchant (Commercials): Commercials hold a net short position of -15,576 contracts (38,888 long vs. 54,464 short). While this is a fundamentally typical hedging posture, the size of their gross positions has collapsed, with longs falling from 51,648 and shorts from 65,570 in just one week.
• Swap Dealers: This category flipped to a net long position of +2,960 contracts (23,979 long vs. 21,019 short). This is a notable shift from their -437 contract net short position in the prior week.

Flows and Week-over-Week Changes

The reporting week saw major shifts, driven by liquidation rather than new positioning. * Managed Money: This group was a net seller of a modest 1,005 contracts. The change was composed of liquidating 308 long contracts while adding 697 new short positions. * Producer/Merchant: This was the epicenter of the week's activity. Commercials massively reduced exposure on both sides of the market, liquidating a staggering 12,760 long contracts and simultaneously buying back 11,106 short contracts. This resulted in a net change of -1,654 contracts, slightly increasing their net short stance, but the primary story is the gross position collapse. * Swap Dealers: Swaps were net buyers of 3,397 contracts. This was accomplished by adding 738 longs while significantly reducing their short book by 2,659 contracts.

Commercials vs Speculators

The classic positioning dynamic of speculators (Managed Money) being net long against commercial (Producer/Merchant) hedging shorts remains intact. However, the conviction from both sides appears to be waning significantly. * Speculators: The Managed Money net long position has been halved from its January peak, indicating a substantial reduction in bullish enthusiasm. The trend for the last three consecutive weeks has been a contracting net long position. * Commercials: The dramatic exit by Producers suggests a major change in hedging activity. This could be triggered by a contract roll-off, meeting physical delivery needs, or a fundamental reassessment of forward pricing that reduced the urgency to hedge. Their net short position remains, but their overall footprint in the futures market has shrunk considerably this week.

Open Interest and Participation

• Open Interest: Total open interest collapsed by 18,399 contracts, falling to 156,645. This is the lowest level of market participation seen across the provided historical data and underscores the significance of this week's liquidation.
• Participation: Managed Money's share of the market is now 24.0% of longs and 12.5% of shorts. Their long-side share has fallen from levels near 27-30% in January. Producers/Merchants now account for 24.8% of longs (down from 29.5% last week) and 34.8% of shorts (down from 37.5%).
• Concentration: Market concentration remains moderate. The largest four traders control 12.4% of the net long position and 10.7% of the net short position.

Price Context

The price series data was not provided in the JSON payload. Therefore, it is not possible to correlate these significant positioning changes with specific market price action during the reporting period.

Risks and Watchpoints

• Liquidation Driver: The primary question is what prompted the 18k contract drop in open interest. Understanding if this was a technical event (e.g., front-month contract expiry) or a fundamental shift in market outlook is crucial for assessing future direction.
• Waning Speculative Support: The steady decline in the Managed Money net long position removes a key source of buying pressure. If this trend of profit-taking or long liquidation continues, it could weigh heavily on the market.
• Commercial Activity: The market will be closely watching whether Producers/Merchants re-establish their large hedge books in the coming weeks. A continued low level of participation would suggest a more persistent change in their hedging strategy.
• Swap Dealer Role: Swap Dealers flipping net long while commercials liquidate suggests they may be acting as a liquidity provider. Their positioning will be a key indicator of where inter-dealer and client flows are heading next.