LEONARD LUMBER REPORT: The futures market dug itself out of the hole last week
The futures market dug itself out of the hole last week with a little help from the funds. The start of the roll slowed the computer selling, allowing the futures market to breathe. At 13%, the market was going to correct, it just needed a nudge. On Friday, the final count for fund shorts hit 5,000. That was pre-roll. The funds did about 2,000 spreads last week, so there is more to go. Please remember that the buying of the front month and selling of the second month is not a guaranteed rally. It just hit at the right time ...
LEONARD LUMBER REPORT: The data told us what we already knew
The data told us what we already knew: the funds were selling the market. The Tuesday-to-Tuesday jump was close to 2,500 contracts. That could do some damage... and it did. The industry used the break to liquidate shorts and add longs. By Friday, the market was $20 lower, causing many to start to second-guess their move. This is not a bad level to be long from a fundamental perspective. The issue is how much more selling the funds have left before the roll begins. Most of the time, they will slow or stop outright selling and simply roll their position ...
MARKET UPDATE: JULY 24 – AUGUST 12
Corn caught a bid on today's August USDA Crop Production and WASDE report, the first survey-based, field-sampled yield estimate of the season, and the market did not get the bearish surprise many were bracing for. USDA cut the national corn yield to 180.7 bushels per acre, down 5.8 bushels from last year's record 186.5 bpa, while also finding an extra 1.4 million planted acres, pushing total planted area to 96.7 million and harvested area to 88.6 million. Total production still landed at 16.013 billion bushels, which would be the second-highest crop on record if realized. The bullish twist was on ...
LEONARD LUMBER REPORT: these fires are a real issue. We will see if they have any impact on our market.
Note: these fires are a real issue. We will see if they have any impact on our market. We will start the commentary out with Commitment of Traders. It comes out for the Tuesday-to-Tuesday report, so it lags. Up until Tuesday, most of the trade was blowing out. The industry exited shorts and the funds exited longs. From Wednesday on, open interest started to grow again, with the guess being that the industry added longs while the funds added shorts. What we continue to see time and again is the short funds getting out only to come roaring back. The ...
LEONARD LUMBER REPORT: Fifty dollars in five days. Lumber futures gave it all back.
Fifty dollars in five days. Lumber futures gave it all back. While there was weakness in the cash market, it was nowhere near that severe. There were many combinations of players involved, but at the end of the day it was the algo-driven push that unraveled the move. That forced the longs out and brought the industry in. The Commitment of Traders report adds another layer of confusion, as it shows funds getting longer. The issue is that the data only runs through Tuesday, so it does not yet provide a complete picture of the market's current makeup. To keep ...
