The futures market continued its rally on Friday, fed on asteady diet of short-covering and local buying ahead of the holidayweekend. Early gains posted by the October contract led to a quickspike to the $1.86 level before light position squaring trimmedadvances before the closing bell. That left the prompt contract upa respectable 7.1 cents to settle at $1.783. October was not alone,November and December each more than matched October’s gains,increasing 7.6 cents and 7.3 cents, respectively.

“What we saw [Friday] was a technical bounce lead by locals whocame out gunning for [buy] stops in the $1.81-82 area. As soon asthe market broke through that level it moved easily to themid-$1.80s. However, afternoon trading saw light selling andposition squaring ahead of the weekend that allowed the market tocome off its highs, a Gulf Coast marketer summarized.

Looking ahead, bearish traders stunned by the market’s strengthare hopeful the long-term downtrend will resume this week. “Shouldbe a whole new ball game Tuesday. The last molecules of lostproduction will be back on line [last] Saturday and Sunday. Whenfutures were trading in the $1.60s with cash in the high $1.50sthere was little downside potential and thus buyers felt veryconfident stepping up. Now we traded up to the middle of the recenttrading range bounded by $2.07 at the top and $1.63 on the bottom.That makes the longs a little more susceptible to a quick movelower,” a marketer reasoned.

However, another source felt the recent tropical storm activityand the lurking threat of more supply disruptions will continue tobe a supportive factor under this market. He looks for October tolanguish in the $1.70-1.85 range until the next storm poses athreat to the gulf.

That may not be too far off. As of 5:30 PM Friday a large butdisorganized area of cloudiness and thunderstorms was located overportions of the central and western Caribbean Sea. However,development into a possible tropical storm is expected to be slow.

Tom Saal of Pioneer Futures in Miami admits that a hurricane oreven the threat of a storm could propel the market outside theaforementioned $1.70-85 range, but he puts more stock in thesoon-to-be-released winter forecasts. “Those predictions can callfor one of three things: above-average, average, or below-averagetemperatures this winter. Coming off the warmer than normal El Ninowinter earlier this year, I’d say anything but a prediction for awarmer than average winter would be mildly bullish.”

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