LEONARD LUMBER REPORT: The futures market sprang to life on Friday
Recap: The futures market sprang to life on Friday, with May spiking to 620.50. It looks as if long-term buy stops were hit without any selling above. This market needed a little rattling. It wound itself tight into a small range while the cash market was busy daily. The premium did add to the buy side reluctance but a spike higher was brewing. Now what? Weeks ago, we discussed the cash market needing to be the leader. Futures were already at a premium, and only the sell algo was trading. The cash side has been strong for a few weeks ...
LEONARD LUMBER REPORT: IT IS STILL FEBRUARY
Note: It is still February. I have to remind most traders of that. Most are trying to accelerate the cycle up a few months, looking for all the issues to hit. In reality, the market is trading at an average February pace. What is unusual is the added buying in the last few weeks. Most are trying to hold a consistent inventory level into the spring buy. The previous two weeks' business was not an inventory build but a fill-in. That is mildly friendly. It is a challenging environment to navigate. For every negative data point, there is a positive one. ...
AG MARKET UPDATE: JANUARY 26 – FEBRUARY 9
Corn has had a rough 6 months and continued lower with bearish sentiment and funds being short. The USDA report had higher Brazil corn production than the CONAB numbers by 10.25 MMT. The market has been looking for any good news to help put a floor in and that has not materialized. The one bright spot in exports is that we are ahead of pace to both Japan and Mexico for the year while China’s demand has been poor heading into the Lunar New Year. The USDA report pegged 23/24 US corn stocks at 2.172 billion bushels, close to the ...
LEONARD LUMBER REPORT: The futures market continues to drift toward the 200-day average
Note: The futures market continues to drift toward the 200-day average. If the market is lower, it drifts up to it; if the market is higher, it drifts down. That average has been flat for months, and the market looks to be near fair value whenever it is close. This is not a buyer or seller manipulation. It is fair value for the current supply and demand. This simplifies the game. If you stay within the goalposts, you make money. Those goalposts are $20 under and $30 over. That was the proper strategy in 2023 and continues into 2024. Can ...
LEONARD LUMBER REPORT: CAN IT BE ANY MORE OBVIOUS?
Recap: Can it be any more obvious? For many months, which are now turning into years, the marketplace has been perpetually short. Some by design and some by necessity. The market is always short. That had been a winning strategy. With a shift to tighter supply, pressure on the buy-side is coming into play today. Last week was a good example where an announcement of another mill closure set futures, not cash off. The industry adjusted by exiting futures positions, not buying cash. Where is the panic? The answer lies with the other obvious factor. As long as construction remains ...
