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Posted by Tango
on July 18, 2019, 6:44 am
The market is spinning its wheel. The OI each day is either unchanged or higher. Unchanged tells us that there is new vs old, likely new buying by managed money and long liquidation. An increase in the OI reveals new buying and new selling. New buying is again probably managed money that is continuing its program. There may be buying associated with fear of frost or because of damage reports, but, has we have repeated, funds have been buying for quite some time and have turned net long buyers. The sellers are, in my opinion, a combination of new shorts consisting of specs, possibly large traders, and likely origin. The OI is partially increasing as selling takes place very far out, to a small degree, and in the middle months in a larger degree. Origin selling by Brazil usually takes place forward of the active month because of the ICE premium and the Selic. But it becomes more obvious when it is traded as an EFP and it will likely hit the market one way or another.
Spreads have not been weak except for the front, SepDec. The expectations of a strong roll have been diminished by managed money has they seem to have covered their shorts in the outright market. The OI as of Tuesday stands at 114,738 lots in Sep and the roll will of course begin probably in late July but it may be a less intense roll. Nevertheless, the spread remains weak.
I posted today because no one seems to be observing the OI, or at least is not posting a view on it. The OI is an important element of deciding about the market. It is important to see that funds have turned from net short to net long and are continuing to increase their long position, if this is truly whatís going on. Commercials however donít seem to be as optimistic in spite of reports of decreased production and poor quality.
- OI - Tango July 18, 2019, 6:44 am
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- Re: OI - Robuster July 18, 2019, 4:55 pm
- Re: OI - Tango July 19, 2019, 8:10 am
- Re: OI - Robuster July 19, 2019, 8:34 am
- Re: OI - Tina July 18, 2019, 9:22 pm
- Re: OI - Sagal July 19, 2019, 4:32 am