Daily Stock Setups

DJ CME Lumber Review: Rally Attempt Fails

Posted on: Thu, 19 Nov 2009 15:03:00 EST

Symbols: CME

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KANSAS CITY, Nov 19, 2009 (Dow Jones Commodities News via Comtex) --
CME | Quote | Chart | News | PowerRating -- Pit-traded Chicago Mercantile Exchange lumber futures prices Thursday settled mostly lower after giving up on a midsession rally attempt.

The January contract settled $1.40 lower at $229.10. March was $0.10 lower at $248.90.

Volume was light, brokers said, as the market digested this week's rally to 4 1/2-month highs.

Cash markets remained very slow as wholesalers turned toward selling newly acquired inventories.

One broker said the market was looking for more buying in the cash markets, which seemed unlikely after a three-day buying spree left wholesalers and distribution yards with adequate inventories on the books.

Investors also could re-emerge from the sidelines, but open interest seems high by historical standards so it looks as though many of the standard investors in lumber may be satisfied as well.

Another broker said one commodity fund-style investment firm appears to have previously sold January contracts it would like to cover. This firm was thought to be buying in the Globex market throughout the session.

The market also was pressured by declines in the stock market and by a stronger U.S. dollar, which could hamper exports of many goods and commodities to hobble an economic recovery from the recession, a broker said.

No spread trades were reported from the pit. A spread trade is one in which two separate contract months are traded in a single transaction with the price difference between them being the important trading factor.

As of 1451 EST, the January/March spread had traded 34 times in the Globex market in a range from $17.00 to $18.70, premium March, with the last at $17.40.

Also in the Globex market, the March/May spread traded 13 times in a range from $1.20 to $2, premium May, with the last at $1.90.

Dow Jones Newswires published a price for SPF 2x4s at $220 to $228, unchanged from Wednesday.

CLOSE     CHANGE      HIGH     LOW
   JAN 229.10   dn  1.40    233.80   228.50
   MAR 248.90   dn  0.10    251.00   245.80
   MAY 251.70   up  1.00    252.50   250.50

-By Lester Aldrich, Dow Jones Newswires; 913-322-5179; lester.aldrich@dowjones.com

(END) Dow Jones Newswires

11-19-09 1503ET

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