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 ?
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.
Generally, movements in price over the last few years have coincided with trends in open interest by noncommercial traders. We can see that during periods where speculators have been net short, prices typically declined, even if only slightly.
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.