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Screen Rally, Short-Covering Nudge Cash Upward

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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