Fueled by stronger cash prices and revised weather forecasts,the futures market erupted higher early yesterday as speculativeand commercial traders added to their positions. However, afternotching the highest mark for a spot month since the week endingDecember 12, 1997 at $2.77, the September contact filtered lower ina quiet afternoon session to settle at $2.721, up 2.3 cents on theday. Estimated volume was light, with 62,221 contracts changinghands.

Several traders contacted by NGI said fresh weather forecastsreleased by both private and public sources were a central factorin yesterday’s price surge. In its latest six- to 10-day forecast,the National Weather Service calls for above-normal temperatures bythis weekend for almost the entire eastern two-thirds of thecountry. Only a small swath of Northern New England and the Westernstates are expected to see normal and below-normal temperatures.

“Lack of sellers,” quipped Tom Saal of Miami-based PioneerFutures in an attempt to explain yesterday’s near vertical move to$2.77. “Cash came out strong and once September pushed past priorhighs in the $2.72-725 area, fund groups came in to lift the markethigher.”

However, bulls were not 100% successful yesterday, Saal said. “Isuppose it’s splitting hairs, but [September] did not settle aboveprior highs [Monday]. It is one thing to move through levels ofresistance, but it is another to also settle above them.” Saaltargets $2.725 as the number to beat and warns that historicallyonce the market starts to reach for the clouds, it can trade indimes.

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