NY futures rallied further this week, with December advancing another 316 points to close at 67.05 cents.
The market continued to relentlessly press higher and December has now advanced by 1530 points since closing at 51.75 cents on May 14. A look at the candlestick chart, which illustrates the battle between buyers and sellers, tells us that buyers have been firmly in control during this two-month ascent, as the market closed higher than it opened in 29 out of the last 41 sessions.
Sellers managed to claim only some minor victories, as the market closed either lower or unchanged compared to where it opened on just 12 occasions, with the biggest such 'drop' amounting to a mere 67 points.
This kind of market action has clearly been frustrating to the large number of futures shorts held by the trade, even though most of them have an offsetting long position in physicals.
But since the futures market has advanced so much faster than the cash market and thereby put pressure on the basis, it has prevented basis-long merchants from making any price concessions to mills.
Mills on the other hand were caught on the left foot since they were for the most part only covered nearby, which left them with no other choice but to pay up in order to secure additional supplies.
In other words, this recent bull market has been fueled by a sequence of events, from the original spec short-covering to some new fund buying, against which thetrade has had very little left to sell into since it was already committed to a very large net short position.
marketing@alchempro.com
