“It is the lack of physical activity — confined only to desperate covering of nearby physical contracts — that has caused the drying up of their normal futures activity, reducing the liquidity,” said Pam Thornton, a veteran commodity trader at Nightingale Investment Management, who’s best known for her role at former cocoa hedge fund Armajaro Asset Management. “So if you have to buy futures, you can easily move the market very quickly.”2)
Once again, I don’t recommend trading in markets that aren’t capable of providing the liquidity necessary for seamless entry and exit. 1)
Liquidity is also returning to the futures market, with open interest in global benchmark Brent near the highest since last February.
IXM, owned by China’s CMOC Group Ltd., has built up an unusually large position in the LME’s aluminum contract for delivery tomorrow, which as the third Wednesday of the month is a key focal point for liquidity, according to people familiar with the matter who asked not to be identified discussing private information.