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RC chart for period covered:
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BLUE LINE = BRLUSD
The market had a 14.25c range with a high of 196.75, and closed at 185.45 down 8.40c from the previous week. The first day of the COT report, 9/8, the drop from the highs was 8.70c in a low outright volume day, indicating fragility. The changes in the COT report again indicate two way activity as attempts to rally invited sellers. Yet some stability was evident surrounding the 185.00 general level. It appears that much of the pressure came from delta selling as we see in the supplemental. The spec sector sold delta while commercials covered. Spec also sold option spreads.
The days following the COT, prices remained generally stable. The attempt to break through 190.00 failed but the Real seems to have contributed to the pressure. RC however remained strong. During the COT week the arbitrage closed at the lows of the period at 91.87, indicating a relatively stronger RC. The remaining days of the week showed continued support in KC in the 185.00 general area and a very strong RC as the X/Z arb closed at 88.83.
Spreads in KC remained steady but frozen and quiet except in the front spreads that remained soft. RC spreads remained strong with the F/H ending on Friday at $64 premium.
RC which is well supplied but locked in is strong. The buying that has been taking place is mostly managed money but commercials bought as well in this last report. KC which will presumably be short in supply is not locked in. The KC market is behaving as if waiting for more news. Hopefully we will start receiving production projections for both crops, ‘21’22 and ‘22’23.
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