BLUE LINE = BRLUSD

The market hit the 122.00 area in May, 120.00 in March, 3 times before ending with strength and closing at the highs. It rendered a 4.75c range and a net change of positive 1.20c. It appears that swap dealers, accompanied by large traders, were responsible for the sudden strength, defying a weak Real but attracting commercial selling across the board, including the July23 delivery month, and Small Trader long liquidation.

Managed money ended up flat possibly signifying early selling and a reversal to buying. Of course, the COT read requires more guessing than usual as the March option expiration makes the interpretation more nebulous than usual. In RC, where funds are less predictable as KC, and there was no option expiration, they were new buyers. Regardless of the flat KC activity of funds, it is obvious that they are now buyers.

The market continued to be dominated by spreads although many of the spreads were as a result of outright selling in forwards, likely origin who were attracted by the weak Real and a steady coffee market. As a result, forward spreads from Dec21 to Jul23 were weak. The more proximal spreads remained defensive.

The 130.00 area has so far proven to be a challenge to the market. Whether it will manage to surge through it or not we will see. For now, it remains resilient to any weakness caused by commercials and other longs. Fundamentals are becoming more bullish as Judith Gaines is being cited for referring to the long term damage of the plants affected by the winter drought in Brazil. At this point, the market is at a 50/50 mark imo. Its performance for quite some time has been of fizzled rallies. For now the only buyers appear to be fund shorts and they are not exactly creating a runaway market. We continue to gage the force of both buyers and sellers.