A steady start provided the platform for buying to flow in and take Oct’22 up to 18.14 during the early stages, quite possibly encouraged by Friday’s COT report. The report showed that as at last Tuesday the net speculative short had increased to -65,642 lots, and with most of this position likely still in place given the limited upward movement at the end of last week the push to try and encourage some short covering seemed a fair play. The highs were seen only briefly before prices eased to hold either side of 18.00 for a period, until some light selling (long liquidation) sent the price quickly back to 17.79 due to a lack of buying. Sideways trading then resumed, just at lower levels, with attempts to pull the market back into credit lacking support meaning a continuation of the apathy that was being felt last week. This pattern was maintained throughout the afternoon, only small volumes changing hands along the way until with welcome relief the close finally approached. There was some MOC buying / position squaring which printed Oct’22 back to 18.02 during the closing stages, though settlement was made at 17.96 to leave the picture unchanged for yet another day. 

undefined

Higher opening prints were seen only briefly as selling kicked in to register significant losses over the first couple of hours with Oct’22 printing back down into the upper $530’s. Such was the volatility that the Oct’22 white premium was valued below $142, a mighty $14 beneath the levels traded on Friday’s close, and the sellers were not yet finished as another push lower sent Oct’22 to $536.70 later in the morning. Some short covering followed this low to send prices back into the lower $540’s, while by this stage there was also some pressure being applied to the No.11 which was bringing the premium values back from their lows. Any expectation that the arrival of US specs would lead to additional volatility were quickly banished as market continued sideways, and the quietest afternoon for some time ensued as prices eased slightly back up the range but in the most tedious of ways. This enabled nearby spreads and premiums to further recover with Oct/Dec’22 ending the day at $30.60 and the white premium valued at $149.00, while the outright prompts moved sideways until the bell with Oct’22 settling at $545.10. 

undefined

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.

More from this author