The volatility continues as we get closer to N'07 expiration with the spread between N/Z'07 swinging between 480/580. The balance of the open interest in N'07 came down over 6,000 contracts yesterday to only 8,700 total this morning.
The electronic trading was very firm before the open outcry and even had posted gains back past the highs of yesterday @ 62.17.
Within about 20 minutes after the open outcry started, the market swung from 61.65 down to 60.65 and back up to unchanged. The volume in futures was 50/50 floor and electronic with a total of 35,000 and options reached over 25,000 with neutral to bearish activity.
Export sales and shipments were within expectations at just over 200k in sales which was 30% higher than last week and shipments were about the same at 450K. If we can maintain that pace through the end of July, we will make the current USDA estimate of 13 mb's.
Chicago grains took another pull back today as wheat was unchanged, but soybeans lost 20 cents and corn almost 10. The commodities continue their volatile cycle which has been influencing cotton to a certain extent, but cotton closed firm and the N/Z spread came in on the close back to 500 pts.
Technically, Z'07 looks like it will continue to search for buy stops above the market which are said to be resting at 62.45 scale up. On top of that we are at the very critical transition period between crops and this forces mills to buy even if they are not happy with the market levels.
China has even announced they will open up strategic reserves to cool off local prices that are very strong recently. However, we did mention that the specs have to be reaching a level that is difficult to maintain and the RSI is over 73%.
With N'07 expiring and Z'07 becoming the most active month, we will have to wait and see if this high at 62.10 can hold or we try and test 63.50.