The week started with a rather subdued market environment seeing prices ease off a touch, March’23 edging down to 19.50 by noon as weaker macro factors seemed to combine with some uncertainty following Friday’s failure to end nearer to the highs. There seemed little prospect of significant movement as the US morning kicked off however we should know better than to discount the specs and their desire to continue pushing. Over the next couple of hours March’23 was pushed upward to challenge and surpass Friday’s 19.85 high mark, with the relentless grind upward then being further maintained as they went in search of 20.00. As always, the round numbers attract a greater level of selling and so it proved as the market met increased resistance and topped out at 19.98, with the March/May’23 spread having extended to 1.13 points on the back of the flat price movement. Some liquidation/profit taking was seen however the actions were considered meaning there was no sharp retracement, and this allowed a period of sensible consolidation ahead of the close which maintained the positive glow. The call proved to be more subdued than might have been expected as March’23 maintained the same band to settle at 19.83, concluding another impressive technical showing though with many questioning how much longer the funds will wish to drive things ahead in the absence of any material shift of the fundamentals. 

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The market came under immediate pressure to start the week, with March’23 being sold down to $532.00 as the macro trend influenced market sentiment. This impacted the white premiums with March/March’23 giving back some recent gains and returning to $102.00, with things then settling in this area to become a morning of quiet sideways trading. The start of the Americas day then brought some fresh impetus to proceeding with prices starting to pull away from the lows and inspired by strength on the No.11 we pulled up to work to new daily highs. This encouraged some additional spec buying to the fore as they seized the chance to work further into fresh ground, the continued lack of selling aiding the efforts as a high of $545.40 was recorded. Profit taking ensued once the market had topped out to send prices back down into the range and heading into the close March’23 was trading back at unchanged levels. It remained here to settle at $538.70, a solid enough showing though with signs that maybe we have seen enough gains for the time being. Dec’22/March’23 saw some wild movements with the market now thinning ahead of tomorrow’s expiry, ranging between $21.10 and $37.90 before ending the session at $27.80. Widest trades were recorded during the early afternoon before the depth reduced quite significantly, something to watch with interest tomorrow as the final manoeuvring takes place from those involved in the tape. Open interest was only marginally lower at 12,258 lots, pointing towards a potential tender of around 500,000mt once all is said and done. 

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Jon Whybrow

Jon joined CZ in 1991, working in the Treasury department before moving to join the derivatives team in 1994. Over 30 years Jon has built up significant experience across derivatives markets and products, particularly sugar, and is now Head of Flow derivatives providing market execution services for CZ’s global client base. He is responsible for the market commentaries which are published each day on CZ app.

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