Word around the floor this morning was that expectations were for another bloody day of lower prices, as following on from yesterday the spec funds were expected to batter prices once again.
Funds turned up with near 1000 contracts to sell between Dec, March and May, so it was with some surprise that prices opened around unchanged.
As the re-open came and saw some higher levels, it became clear that there had indeed been quite a degree of trade export business overnight, and the resultant commercial hedging early took prices up some 90 points in December.
Another early factor was that without the constant bear spreading from the index funds ( with the GSCI roll officially over yesterday ) the Dec gained a lot of ground on March, and as the day progressed this became more alarming with the Dec / march spread narrowing from near 400 yesterday back to around 325 by the close.
Trade continued as a heavy outright buyer of December, to the stage where many were wondering if there may emerge a strong stopper of the December contract.
What is more likely is that today's spreading found a liquidity hole without the GSCI rolls. As a result the December finished with solid gains of 77, whilst the March settled 5 points lower. Estimated volume was again very large at 47,000 lots.
Tuesday's traditional spec hedge report will be delayed until tomorrow morning. Whilst the CFTC report on Friday indicates a spec position which is lessshort week on week ( CFTC futures only—14.7 percent), with December options expiration and a lot of in the money puts exercising, there is a likelihood that spec shorts even further reduced having had short in the money puts exercise against short futures.
marketing@alchempro.com
