Screen Rally, Short-Covering Nudge Cash Upward
In what some sources referred to as "winter's last hurrah," cash
prices began the week on an up-note as they garnered momentum from
a futures rally and continued covering of first-of-month short
positions. Cash prices at most trading areas around the country
gained 1-3 cents from weekend levels.
"Cash movement [Monday] was predominantly in sympathy to the
screen," said a Gulf Coast marketer, who reported Texas and
Louisiana prices up anywhere from 1-3 cents on the day. "Nymex has
been up and down over the past couple of days and so has cash, but
there is no clear-cut direction for this market." However, the
source added the market overall is "slowly but surely" recognizing
that we are at the end of winter and is expecting to have about 30
days of fairly stagnant demand and weather patterns.
A Midcontinent trader, who reported Chicago citygate deals as
high as $1.80, said some of the cash strength on Monday was due to
some short-term weather. "We have had some snow and expect a lot of
precipitation to come into parts of the Midcontinent over the next
three days, and overnight lows aren't picking up like we thought
they would," he said. He reported temperatures in the low 30s for
the Chicago area.
"This [was] in addition to the futures rally as well as
end-of-the-month short-covering that has been giving some support
to prices." However, he said that in the longer term, most
expectations are for prices to bottom out.
The short-covering scenario was confirmed by other sources, who
said that the only reason they were out on the day market Monday
was "because we were forced to."
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