The day got off to a very slow start with Oct’22 holding a few points above last night’s settlement level, seemingly fixed around 17.85 right the way through until the Americas day got into full swing. This apathy came despite a generally positive macro and some good strength for the London whites, and even when a little more buying from spec/day traders emerged as we moved through the afternoon it simply served to edge the market closer to 18.00, working into some solid pricing in the process. There was better strength at the top of the board with Oct’22 extending spread premiums as we move closer to expiry, the afternoon seeing Oct’22/March’23 trade to 0.49 points while generally holding the top of the range. Faced with the better volume selling March’23 struggled to work far beyond 18.00 during the later afternoon, hitting 18.03 on a few occasions but struggling to make any further progress. Heading into the close we continued to the upper end of the range, Oct’22 making new highs at 18.52 on the call as the spread reached 0.51 points, with settlement levels established for Oct’22 at 18.49 and March’23 at 18.00. The continued struggle against better selling to the top of today’s range raises the same old questions as to whether the market can sustain a push higher longer term, time will tell whether this occasion can buck the trend of recent failures above 18.00.

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A calm start saw the market trading slightly higher on low volumes, however the picture soon ignited with an aggressive push higher to $532.80 for Dec’21 on just a few hundred lots, potentially spec buying as they look to defend against the still significant long holding. This rally enabled the white premium values to regain some of the recently lost ground, and though things then quietened again for the next few hours they did so while consolidating the gains. A second spike higher followed during the early afternoon which this time took Oct’22 up to $540.30, a remarkable reversal of recent fortunes which also saw Dec’22/Mar’23 trading to a widest $35.40. While solid gains were also showing across 2023 positions, they were far more modest than for the spot month, likely emphasizing the defense spec nature of the move to focus upon where that are positioned, with March/March’23 stabilised near to $107 having punched beyond $109 when Dec’22 spiked to its highs. There was another move to rally Dec’22 during the final hour which failed shy of the session highs, though despite some late position squaring the day concluded positively with settlement made at $536.90.

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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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