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The sharp decline seen yesterday as trading resumed from the Christmas break did not draw out any significant consumer activity/interest, and so a small continuation of the move was seen for the opening with March’23 quickly dropping back to 20.10. With light support then appearing the market was able to consolidate between 20.10/20.24 for the rest of the morning, though for the most part volume was minimal with many traders away from their desks this week and instead celebrating the festivities. The start of the US day saw some spec/fund buying reappear to send the price back upward to 20.49 however their defensive activity then dried up with an equally quick decline leaving values near to the morning low. Spreads were seeing only limited movements with the March/May’23 remaining in the 1.30’s throughout the session and showing little change late on, despite a final hour slide for March’23 which saw it match the 20.10 low. Buying ahead of the close ensured that settlement was made just away from the lows at 20.16, a second consecutive lower close though not so bad as to damage the wider picture for the sizable fund long now in place. 

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A significantly lower call was being made for the London whites after the No.11 market had fallen by more than 60 points while we remained closed yesterday, and so it came to bare as March’23 commenced at $560.60. This still placed the white premium ahead of Fridays levels with March/March’23 in the region of $115 against first prints before slipping back by a couple of dollars soon afterwards. The market held a narrow band near to $555.00 for most of the morning during which time the premium further declined due to No.11 movements to be once more beneath $110.00, though while the market was some distance shy of last Friday’s contract highs there was no sign of any significant liquidations from funds. With commercial buying limited despite the pullback the day became one of quiet stalemate, with prices continuing within a narrow band and showing no sign of mounting a move to either side. March’23 recorded lows at $552.00 midway through the afternoon without invoking any kind of reaction, specs still absent from the market, possibly keeping their powder dry ahead of this Friday’s year end. A slow closing period did at least see prices hold away from the lows to bring nearby premiums back up, March/March’23 ending at $111.25 as the March’23 closed at $555.70, and while a disappointing showing in context of recent activities one feels a further twist remains likely over the next couple of days.   

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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