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Notas del Mercado de Algodón por: Jurgens Bauer 03/12/2008


Futuros USA


 

Limit up, (and beyond) again regardless of a bearish report

 

First limit up for the first two sessions following outcry’s demise, then limit down for the next three, hey it’s Tuesday, so that must mean limit up again right? Wow!


And so limit up it was after screen trading moved limit by 8:20AM or just prior to the release of the USDA crop report. Once the numbers came out then prices came off in response as the bearish numbers which showed exports reduced by 1.2 million bales and in turn raising ending stocks to 9.4 MB. This bearish response however only lasted until bulls came back in with a vengeance and values were again driven up the limit and synthetically to 200 and 300 points above.


Funds may have been experiencing difficulty in securing credit, but given today’s action by the Fed and another day to seek off shore sources they didn’t seem to have that problem today.


The Federal Reserve announced a new program called the “Term Securities Lending Facility”. The program’s plan is to lend up to $200 billion to banks for a term of up to 28 days instead of the typical overnight loan. As I understand it, such short-term loans will allow investment firms to pledge other securities (including residential mortgages) as collateral and this action should serve in an effort to deal with the increasing credit problems plaguing the US economy. The dollar as well as the equity markets responded gloriously.

Although some traders interpret this move as a signal the Federal Open Market Committee may be less likely to aggressively reduce interest rates at its regularly scheduled meeting next week, it does show some needed creativity from the Fed and that is encouraging. It means that they are seeking to use other tools to combat the liquidity crisis. It was this problem with liquidity that caused massive cotton positions to get covered up top and spurn long liquidation. This however does little to fight inflation and that is a key to the growing enthusiasm for investment in commodities as assets.


I heard word that ICE is going to margin futures at limit and not synthetically, but as of this writing could not verify. If true such action will serve to force some liquidation, but it might also increase option volatility and usage.


Options traded again synthetically after futures locked the 400 point limit at mid day. Here are approximate synthetic settlements: May 8375, July 8650, Dec 9150.


Si quiere más información, por favor contáctenos,
Maria Aranda
El equipo de Brokers de Futuros USA
Email: mararanda@mfglobal.com
TEL: 312-261-7395



Fuente: MF Global

©2007 Jurgens Bauer & Associates all rights reserved.

Jurgens Bauer

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