Palladium COT Report: Week Ended October 16, 2026

Executive summary

The CFTC Disaggregated Commitments of Traders report for Palladium (PA) as of October 16, 2026, reveals an unprecedented short positioning build by speculative accounts. Managed Money expanded its gross short position to 16,003 contracts—a new peak across the entire analyzed dataset—pushing its net short exposure to -10,699 contracts. Total open interest surged by 2,113 contracts on the week to 23,173 contracts, continuing a multi-week liquidity and position influx. This surge in short participation aligns with heavy downside momentum in the underlying front-month contract, which fell to $1,088.0/oz into mid-October. Offsetting this aggressive trend-following short program, Swap Dealers and Producer/Merchants absorbed liquidity on the long side, lifting commercial net longs to multi-month highs.

Positioning (net, extremes vs recent weeks)

Speculative sentiment in NYMEX palladium futures has shifted to an extreme net short stance:

• Managed Money Net Position: Net short of -10,699 contracts (5,304 long vs. 16,003 short). Gross shorts now account for 69.1% of total open interest. This is the most stretched short positioning observed across the dataset; for comparison, managed money was net positive (+293 contracts) back on December 23, 2025, and hovered around -4,500 to -5,500 contracts in late summer 2026 before accelerating to -9,385 on October 9, 2026, and breaking beyond -10,000 this week.
• Commercial Categories:
  • Swap Dealers: Gross long of 8,351 contracts against 2,174 short, yielding a net long position of +6,177 contracts (36.0% long share vs. 9.4% short share).
  • Producer/Merchant: Long 2,028 contracts versus 1,110 short, creating a net long position of +918 contracts.
• Other Reportables: Held 3,481 long and 860 short (+2,621 net long), providing secondary liquidity against speculative shorts.
• Nonreportable (Retail): Modestly net long at +983 contracts (2,821 long vs. 1,838 short).

Flows and week-over-week changes

Total open interest expanded significantly alongside heavy flow:

• Open Interest: Grew by +2,113 contracts (+10.0%) to 23,173 contracts.
• Managed Money: Added +819 longs while surging +2,133 shorts. Spreading contracted by -284 contracts to 793. The net weekly managed money flow was -1,314 contracts.
• Swap Dealers: Added +629 longs against +58 shorts (spreading +14), expanding their net long book by +571 contracts.
• Producer/Merchant: Increased long inventory by +583 contracts while covering -153 shorts, registering a net flow of +736 contracts.
• Other Reportables: Added +308 longs and +55 shorts (spreading +131), a net addition of +253 contracts.
• Nonreportables: Reduced longs by -87 contracts and added +159 shorts (-246 net change).

Commercials vs speculators

A stark divergence defines the NYMEX palladium structure:

• Speculative Overhang: Managed Money short concentration is historically elevated. Forty-six short managed money traders hold 16,003 contracts (69.1% of total open interest). Combining spreading (3.4%), managed money accounts for 72.5% of total market short exposure.
• Commercial Buffer: Commercial and dealer participants have accommodated this aggressive speculative selling. Swap Dealers hold 36.0% of the long open interest (8,351 contracts across 21 traders), while Producer/Merchants hold an additional 8.8% (2,028 contracts across 19 traders).
• Concentration: The 4 largest short traders control 26.4% of the net open interest (27.2% gross), while the top 8 short traders hold 39.8% net (40.7% gross). On the long side, the top 4 traders represent 22.6% net and the top 8 hold 34.2% net, reflecting a moderately balanced concentration at the very top tier, though speculative aggregate volumes remain heavy.

Open interest and participation

• Total Open Interest: Stood at 23,173 contracts, the highest level recorded in the historical series provided (up from a low of 14,648 contracts on April 17, 2026, and 21,060 contracts on October 9, 2026).
• Participation: Trader count expanded to 197 total participants (up from 183 in the prior week and ~130–150 earlier in 2026).
• Driver of Expansion: The concurrent increase in open interest (+2,113) and managed money gross shorts (+2,133) confirms that the primary driver of market liquidity over the latest reporting period was fresh directional short initiation rather than short covering or spread liquidation.

Price context

Front-month Palladium (PA) cash/futures closing prices illustrate a sharp downward trend leading into this report:

• In late August 2026, prices peaked at $1,435.5/oz (August 28).
• The market steadily retreated through September, dropping from $1,390.0 on September 4 to $1,305.0 on September 18, and breaking support to close at $1,209.0 on September 28.
• The latest quote provided shows the front contract trading down at $1,088.0/oz on October 14, 2026, marking a drop of $347.5/oz (-24.2%) from the late-August peak.
• Data note: Daily closes are sparse between late September and mid-October, with no continuous quotes between September 28 and October 14. However, the available data highlights that aggressive managed money short additions took place during a severe price contraction.

Risks and watchpoints

• Short Squeeze Vulnerability: With Managed Money gross shorts at a recorded high of 16,003 contracts and open interest heavily skewed short, palladium is exposed to acute short-covering rallies if an unexpected supply disruption occurs or macro sentiment pivots.
• Commercial Exhaustion: Swap dealers and producers continue to absorb selling, but if dealer balance sheets cap additional long absorption, market depth could deteriorate rapidly.
• Trend Acceleration: Despite the risk of a squeeze, the strong alignment of rising open interest, fresh speculative capital inflows, and lower prices points to robust trend persistence toward key psychological round-number levels ($1,000/oz) until short liquidation commences.