Blue Line = BRLUSD

The four-day week in KC began at the high of 244.90, a level which proved to be one of resistance. This level obviously attracted sellers but the sector that is most evidently responsible is again the Index funds who sold via the swap dealers. It is obviously rebalancing by the funds who have adjusted their books by selling over 11,000 lots. In RC funds sold close 6,000 lots for a total of almost 11,000 lots for the two-week period, driving the arb to 140.00c. The buyers in KC were mostly non-index momentum funds to drive prices higher, and commercials bought in both markets as prices eased. The days after the COT report proved to be equally volatile as we saw prices touch 245.00 and dropping to 236.00.

Spreads were mostly reactive to outright price moves. HK however remained under pressure as it drifted back to a discount market. The H OI dropped possibly as a result of G option expiration. It climbed a bit since the COT report. the Delta OI dropped of course. As we look at the individual spreads, the far forwards, from K3/N3 and forward are considerably wider than the front. U3Z3, for example is trading at around +3.00c. Possibly, the reason for the disparity is a combination of a thin market and continued forward selling, maybe by origin.

The sentiment in the forum seems to be one of ambivalence, and the market is reflecting this sentiment. Index funds have always been a reliable bellwether for market direction and are certainly expressing a bearish sentiment. The OI is still elevated in H and roll/notice season is not far. On Friday, the market showed considerable weakness as it could not hold the 240.00 area. Still, the general behavior of the market shows a resilience and the slight correction that we saw did not create panic selling. There is consistent pressure, however. The weak equity markets and the weak Real are certainly factors but fundamentals seem to be increasingly bullish. Fertilizer prices are moving higher causing some producers to consider abandonment. Shipping is still restricted. The production consensus seems to be getting lower as Ecom and Conab reported. Of course, Conab is traditionally lower than most projections.

Thank you Espresso1 for your post and welcome to the forum.