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Market *PIC*

There was some two way action at the opening and shortly afterwards but the market is quiet and on the soft side apparently having difficulty remaining above unchanged for now. Fund selling will likely resume at 8:00. Technically, the low 118.00s is a critical area but bids are plentiful. In July bids are clumped together and in the forwards they are scattered but of good size. The mood seems to be a negative one for the market. The Sep implied volatility has dropped sharply and the SepDec bids have been getting hit. To me the bigger picture is that commercials will support the market while new shorts grow. It’s what we continue seeing, these COT cycles. Of course the market can drift lower until an entity other than commercial or system intervenes but for now building a long position makes sense. The JulSep is now -2.35 bid which is consistent with the premise that spec short position will dictate the spread. As funds were covering outright shorts, the spread dropped and now they are selling new again. The Real hasn’t been a factor, imo, although it certainly appears that way. Brazil’s proximity to Argentina may be a reason for its weaknesses. In any case, there hasn’t been any forward selling at these lower KC prices. There may be front selling but we don’t know if any origin is part of it. The commercial buying of course is not directed by the USDBRL which closed near 3.6000 and is 3.5944 +.0026. COP is 2864.10 +2.24. All other currencies are up against the $. Bond futures are not showing any direction but metals are reacting to the $ weakness. Oil continues to fly and equities are slightly higher. Softs are all a shade lower.

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Market *PIC*
Re: Market