Written Commentary
Good morning,
The market made a new spot month contract high yesterday as the macro allowed fundamental factors to influence prices. The latest COT was also supportive as it showed the funds were not a long as predicted. The market had opened 5 points higher before quickly improving. The market soon pushed through the 21 cent level before taking a breather. However, once US traders got to their desks prices jumped higher again breaking through the previous high. Once the initial buying was completed prices soon dipped and then remained within a relatively narrow 15 point range through to the close. The trading volume improved from the dire level of the previous day but, at under 130k lots it was hardly overwhelming. The KN improved by 6 points to +58 while the NV was 4 points firmer at +31. In London it was a similar story with the market quickly making new contract highs. The KQ improved to +15.70 while the QV jumped $2.70 to end at +17.60. However, the WP improved with KK WP hitting 138 which did trigger some selling. The VV WP was also firmer at 124.20. Yesterday’s strength was probably a combination of a risk-on attitude as the macro improved. The fact the funds were only 134k lots net long when many had thought they may have been over 200k lots and a fundamental picture which remains more bullish than bearish with many unanswered questions on production from major producers.
This morning the market opened 1 point higher before falling back 5 points. Currently, prices are 3 points firmer. The KN is 1 point weaker at +57 while the NV is 2 points lower at +31. In early London trading, the KQ is a tad firmer at +16.00 while the QV is unchanged at +17.60. The macro is mixed this morning with crude lower while grains/soya mainly higher. The USD Index is lower while the BRL ended slightly stronger yesterday at 5.21. The market remains very firm after pushing higher over the two previous sessions. However, there would appear no huge argument for prices to improve further from a fundamental basis. Lower than expected production from India and Thailand is in the market and if the end production does beat recent predictions it could allow further exports from India and Thailand just as the Brazilian 2023/24 season is starting. Nevertheless, uncertainty still abounds on whether Brazil will perform as well as expected and whether the Indian monsoon will be good or bad.
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Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
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