Softs led the charge higher today, with Coffee, Sugar, and Cocoa three of the top four commodity performers on the day. Arabica closed 105.60, +1.90, with a strong underlying bid throughout the session. Spreads were firm down the board, with H/K rising a tick, K/N 10 points, and N/U unch. One could ascribe credit for the move to any number of things – the overlay with the BRL from 8am onwards is impossible to overlook after a difficult KC/FX start to the day (strong dollar / weak BRL pre-Americas trading). The bid in structure was given broad attention, and allocations to the softs basket were a persuasive explanation. Upside options suffered heavy paper selling; the top 3 strikes by volume were all offered, (J 120 C, H 110 C, J 125 C), yet 50d vol held relatively steady with much of the weakness coming on the slide (J 50D vol closed 29.06, consistent with Friday’s 29.10, though futures moved 190 points higher). London closed up 9 at 1556. Volume was patchy leading to an unusually disconnected layover vs KC. Spread volumes slipped vs Friday, coming in just short of 3k lots in the spot H/K (75% of the end of week action).
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