Noncommercial Trader

Noncommercial Trader

A trader on a futures exchange who conducts transactions on commodities for speculative reasons. That is, if a noncommercial trader buys a futures contract for corn, he/she will not need the corn for his/her business purposes when the contract matures. Rather, the trader enters that contract to profit from the movement of price in the meantime. A noncommercial trader may be an individual, but is often an institutional investor such as a hedge fund. The term "noncommercial trader" is used by the CFTC.
References in periodicals archive ?
A more rigorous evaluation of these data demonstrates that, even if one accepts that any correlation between speculative activity and price movements means that the speculation caused the price movement, and speculation drove prices away from their appropriate levels, the noncommercial trader position data do not support claims that speculation forced commodity prices sharply higher in the period ending in the summer of 2008.
Noncommercial traders are those who do not handle physical commodities in the ordinary course of business.
The long position of the noncommercial traders is at all-time high levels, which provides for an extremely limited potential of building up the long positions, which will hold back the quotes strengthening.
This was shown by the figures in the Commitments of Traders report released last week by the US Commodity Futures Trading Commission, a closely watched data set which shows the relative buy and sell positions of the largest commercial and noncommercial traders.
Noncommercial traders are described as speculators, or firms taking positions in the futures market not as a hedge but as speculation on exchange rate movements.
The distinction between commercial and noncommercial traders is based on how firms identify themselves to the CFTC, which in turn monitors firms to verify their self-designation.