Great work Rancher. What can be concluded imo is that the depletion of certified stocks is an isolated Incident and apart from the status of global stocks. And so, as we learned in ‘14/‘15, the drop in ICE stocks is unrelated to the price of futures. We may recall the drought of that period as prices soared. But then the Real fell sharply and producer selling pushed prices back down to the lows, as ICE stocks were dropping. Meantime, global stocks, including carryover Brazil stocks were plentiful. We solicited the advise of a physical analyst at FC Stone who assured us that the movement of ICE stocks will affect prices to the extent that global stocks are moving in parallel. Otherwise, ICE stocks will only impact spreads.

In response to Isuzu’s question on spreads, right now several commercial traders are focusing on the ZH and some forward spreads which have been steady. There are also bids on options on spreads with strikes well above flat. However, stocks are not the only consideration. Spread positions, outright spec positions, interest rates maybe, are all also to be considered. UZ was also well bought by traders and it is now trading at -2.90 even with steady outright prices and U buying. This, while ZH is -2.00 bid. I don’t know the reasoning behind the behavior of spreads necessarily. But, it seems to me that if stocks are depleting as time progresses, then the more forward spreads should be at a higher value then the more proximal spreads. ZH is -2.00 (-66.7/month) HK -1.00 (-.50/month), etc. Thank you for your posts.