Then weaker technical picture drew some opening selling into March’23, sending the price immediately down to 18.26 where we remained through the early part of the day. There was some scale buying interest from consumers which provided valuable support, and this encouraged defensive buying back into the market to pull prices into credit where they remained ahead of the US day getting underway. Smaller specs remain net long of the market and so it was not surprising to see a push up to reach 18.57 early in the afternoon, however the move lacked any real substance and as the initial flurry of buying faded, so prices simply consolidated the upper end of the range. The spec/day trader dominance of the situation was underlined by the lack of interest outside of the spot month, a factor which led nearby spreads to widen out a little with March/May’23 touching 0.94 points intra-day. Despite a resurgence of the commodity macro the later part of the session saw prices holding near to unchanged levels, with the week ending a mere point lower at 18.38 as the range endures. 

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This week’s sharp decline continued through the early part of today’s session with a drop to $524.30, placing the market only just ahead of the $523.00/518.00 support basis September and October lows. Initially it seemed that we would see a test of this area however as the morning moved along so prices worked back up into credit, the first sign that the pressure may be over after a heavy beating. What followed was still unexpected as the market ignited during the late morning to move through $530 and on to a high at $539.90 in quick time, the lack of selling in place contributing massively to the pace of the move, and suddenly the specs were interested once again. Buying persisted into the afternoon to maintain prices at the upper end of the range, though with the macro and No.11 largely disinterested this became harder to maintain as the day wore on. Some day trader liquidation sent Dec’22 back down to the $533.00 area, where it then remained for the rest of the session with settlement appropriately made at exactly $533.00.

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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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