There was some early buying around this morning as the lower levels encouraged some light pricing / hedge lifting, though it was not too long before nearby positions moved back into debit once the necessary buying had been concluded. Oct’22 proceeded to hold tightly to the 18.00 area for the next few hours with volumes proving minimal outside of the spreads, though with little reason being presented to recover the market remained quiet moving into the generally busier afternoon period. A little more selling emerged during the course of the afternoon to extend the range lower to 17.85, and while scale buying was not overly significant in this area it proved sufficient to stem the losses in this environment. A return to the 17.90’s followed on short covering, but it is proving tricky for specs to find reason to guy again currently and so the day petered out quietly. Oct’22/March’23 saw steady activity throughout as a healthy premium was maintained despite the lower flat price, while down the board volumes were negligible. Oct’22 settled at 17.89 to conclude the month with the broad range centred around 18c still firmly in place.

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Having given back all of Fridays gains yesterday it was rather unexpected to see the market open so positively with Oct’22 pushed up to $553.40 during the first 10 minutes before heading back to sit near unchanged levels soon after. Recent failures to test the $560.00 area have dented short-term confidence and so prices came back under pressure to show moderate losses through the rest of the morning, though in general this felt more due to apathy than any noteworthy selling interest. Despite the weakness the white premium values were recovering a little of the recent lost ground, and by the time the market pulled up from its malaise during the afternoon They pushed further ahead still. Though the flat price gains topped out in the low $550’s the movement was still sufficient to bring Oct/Oct’22 back towards $156.00 and March/March’22 to almost $110.00, an impressive recovery given the struggles still being endured by the No.11 market. Closing values saw modest gains for the front of the board with Oct’22 at $550.80, though 2023 positions ended the month a little lower with spread values extended on the day.

 

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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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