Traders arrived to their desks this morning to anticipate the USDA monthly supply and demand estimates. They weren't disappointed when the USDA made some large cuts to the US exports however the electronic market immediately began trading higher once the report came out, with March initially jumping 20 points to the 52.60 area where it jumped around until the pit session began.
The immediate feature on the opening of the pit futures was not the flat price direction but the spread direction. In the midst of the index bear roll, the March / May has somehow managed to narrow all the way in to the extent where it traded near flat in the mid session today, as possible rumors of a US cash market squeeze on the March combined with a panic of commercial shorts out of the March to cause a real tightness in this spread.
Heavy volume through the spread was again on the agenda today, whilst the outright prices bounced around in a general range of 52.50—52.90 in March. Options expiration was the fascination for much of the session today, with some jockeying of the March 53 puts and calls, and a general magnetic attraction of the March contract towards the heavily populated 53 cent strike.
The overall settlement at 52.87 on March will still keep many short 53 strike option holders guessing. That said it was a decent performance in the March today, which not only received help from the option portfolio holders in defending the 53 strike and the 52 strike yesterday, but also via the grain pits which were particularly buoyant today despite no real bullish news in their USDA reports either. Estimated final volume was for 42,902 exchange and 6,581 electronic contracts in total.