The day started with the same positivity as has been seen for more than a week now, however the buying lacked size and so for the first time in a while we saw prices retreat into the red. The losses were relatively modest and were in fact merely retracing the upper part of yesterdays range with March’23 finding support in the 21.50’s from where it was able to comfortably consolidate. This led to a far calmer trading environment that allowed many to take stock and re-assess, with the price action continuing in the 21.50’s/21.60’s as we worked our way through into the afternoon. There was barely a whimper from the US specs as their morning got underway, nor from the funds elsewhere for that matter with a sizable percentage of the volume being accounted for in the March/May’23 spread as it nudged down through 1.30 points. Producers were still keen to pick away with some pricing across the 2023 positions which helped to keep things in check, though the picture only evolved during the second part of the afternoon with the sense of apathy leading to a small degree of long liquidation. Though the range extended lower there was support in place at the front of the board from consumers who are pricing ahead of this month’s expiry, and with no sign of any significant fund selling or stops this allowed a gradual move to 21.33. The final hour played out right on the lows, ending a day of corrective action at 21.37 with questions as to whether we will see some further cooling now that the buying has eased up. 

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London whites had looked more assured over the last couple of sessions, however that may have been a façade as the higher opening prints quickly gave way to selling which had March’23 trading $9 lower with barely an hour of the session having passed. Of greater concern was the lack of volume being seen for both March’23 and May’23 on the move with buyers nowhere to be found, and with rolling pressure once more being exerted onto the spread there was little sign that the reverse could be retrieved. The pattern became calmer as we continued through into the early part of the afternoon, though the downward bias endured as the price struggled to hold above $570.00 before picking up pace later in the day. Into the final hour March’23 had reached a low at $562.10 and May’23 was at $559.00 though volumes for both had been relatively modest throughout and certainly didn’t reflect any meaningful long liquidation, with the bulk of the activity coming from March/May’23 which was sold down to $2.00 on volume of over 8,000 lots. White premiums were also being battered on the move with March/March’23 trading down to $90 late in the day, and though May/May’23 suffered milder losses in reaching $116 the tone being set by the spot month will not inspire confidence. There were further new lows on the post close once we had seen settlements at $562.70 for March’23 and $559.80 for May’23, and having retreated half of the recent move in a single day we await to see what follows.

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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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