Traders arrived to their desks this morning to anticipate the USDA monthly supply and demand estimates. As it turns out most expectations were met with the report overall a little bearish in the US, a little bullish for foreign growths and very much in line with expectations. Full report summary is on page 2. Electronic futures began the day a little lower in both May and July.
By the time the open outcry market opened both contracts were down around 20-30 lower. Commercial selling immediately hit the pit on the re-opening though, with one of the largest merchants drilling out a multitude of bearish strategies in the options pit, including selling over 600 March 53-56 calls and 600 July 55 calls.
There appeared to be a lot of commercial support for May around the 54.00 level and beneath, which allowed a rebound in prices after the first hour. Specs were encouraged by the support and once more entered as buyers, but without the vigor of late.
Prices rebounded to the unchanged level where they were met by the wall of trade selling that has prevailed throughout this week around 54.50 in May. Spreads found some width today with the May/July widening out to 65-70 points May premium. Estimated final volume was for 14,632 lots, which is fairly benign for a USDA reporting day.
According to the CFTC supplemental report of options and futures positions combined, the traditional specs are overall 9,266 lots net short, commercial trade are overall 100,940 lots net short whilst index traders are net 95,298 contracts long. Talk about some dynamics. These numbers are as of March 6th, so we expect that a large part of the spec short has been absorbed by the trade, making the commercial short even more epic.
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