BLUE LINE = BRLUSD

The market made its high, 248.20, on the first day of the COT period, a price not seen for 10 years. The price seems to have attracted long liquidation from index, swap dealers, other funds and large traders. Small traders were sellers in both markets. Commercials bought in KC and sold in RC where funds bought. The activity resulted in a range of 18.95c and a net change of -9.75c in KC. What we experienced was a very volatile two-way market that eventually succumbed to a sharp correction. Many attempts to rally were met with resistance and weakness. The Monday of this week the market registered a range of 17.25c. 230.00 was briefly penetrated on several occasions. During this time, spreads held and, as the market propelled higher on Friday, spreads exploded. The HK moved less than other spreads as the OI dropped both in the total and in H.

Spreads may be interwoven with the outright market. As prices rise spreads rise. Yet they may be independent as well. In RC, FH traded up to 95 premium in a market that’s not a victim of weather but of availability. In KC, my perception is that we have falling warehouse stocks also as a result of inaccessible product due to congested ports and a shortage of labor. We do not yet know what stocks are and what production estimates are. Some in the forum believe that current estimates for both ‘21’22 and ‘22’23 are unrealistically high. Maybe so, but it remains that stocks are increasing if they can’t yet reach the market. Still, outright prices and spread prices remain firm. Any drop in price seems to be an opportunity.

I welcome any comments.