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Commodity traders sound alarm on plunging market liquidity
By Archie Hunter and William Mathis
Bloomberg News
via Yahoo Finance, Sunnyvale, California
Thursday, March 24, 2022
Whipsawing commodity prices and eye-watering margin calls are forcing traders to reduce their activity, driving liquidity out of markets and exacerbating price swings, according to some of the world’s biggest trading houses.
"We're seeing clearly that liquidity in terms of being able to find buyers and sellers in distressed or highly volatile markets is becoming less," Engelhart Commodities Trading Partners Chairman and Chief Executive Officer Huw Jenkins said at the FT Commodities Global Summit in Lausanne, Switzerland.
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Engelhart halved its positions over the past six or seven months, he said.
The company is not alone. As commodities swing wildly, traders and industrial players are struggling to keep up with massive cash requirements to back up their positions or put on new ones, which is squeezing participants out of the market.
The drop in liquidity is heightening volatility when prices do move. Benchmark European natural gas, also known as TTF, surged as much as 34% Wednesday as Russian President Vladimir Putin prepared to demand ruble payments for the fuel. That was just the latest example of the wild price swings spurred by Russia's invasion of Ukraine. ...
... For the remainder of the report:
https://finance.yahoo.com/news/commodity-traders-sound-alarm-plunging-211036246.html
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