Chinese mills look to have clinched impending import quotas
27 Sep '06
2 min read
Futures prices were initially called to open around 40 higher on reports of good overnight export business for both US and foreign growth offers.
Chinese mills look to have embraced impending import quotas and are good buyers with December prices closing underneath the 52 cent mark.
Prices opened up 30 higher on the opening, and put the low in for the day. Early trade buying against exports were followed by heavy local buying, as local floor brokers felt out the stops above the 9 day moving average at 52.37.
Once these levels were cleared prices shot up to near 53 cent resistance at 52.90, where commercial selling was noted. For the middle half of the session prices stayed very quiet, trading a 20 point range between 52.40 and 52.60.
Fund short covering going into the close, mostly technical, forced a firm close with active months higher to the tune of 85 and 89 points. Estimated volume was decent at 12,562 lots.
Today's October notices were just 9 lots stopped by Cargill, with Oct open interest now down to 594 lots.
This morning's spec hedge report showed the specs slightly decreasing their short from 4.3 percent to 3.6 percent. For the week spec longs increased 4,000 lots whilst shorts increased 2,800 lots. The overall net spec short stands now at 6,597 lots, as open interest continues to expand.
Technically the December continues to stabilize between a narrow, 51.50 to 53.00 range. Today it expanded throughalmost the entirety of this range, and there is noted resistance overhead between 53.00 and 53.30.
Today's close settled above the 9 day exponential average, which turns a lot of the momentum to neutral. We would like to see a challenge of the upper end of the current down trend channel at 53.25, but don't harbor too much hope to exceed this level.
To the downside, we would expect to see a large amount of new shorts enter a break below 51.50 and certainly below 51.20, the old contract low.
marketing@alchempro.com
