📅 2026-10-09 · Logs · Single-name brief Legacy coverage

This report is provided by MacroTerms.com

Data as of: 2026-10-08 · Settlement: Exchange settlement (15:00 Beijing close, vs prior settlement)

DCE.LG In-Depth Analysis Report | Bullish: Night Session Breaks Above 830 | 2026-10-09

Direction: Bullish. The core logic is that price has stabilized above the 20-day channel midline with a volume-driven breakout to new highs during the night session, supported by low inventory levels and a widening basis, indicating upward short-term momentum. Key risks stem from macroeconomic data exceeding expectations or a sharp pullback in international markets. The report is based on settlement data from 2026-10-08 and the night session snapshot from 10-09, emphasizing the resonance between technical and fundamental factors.

I. Core Conclusions & Directional Bias

Direction: Bullish

Core Rationale:
1. Technical Breakout: The DCE.LG softwood log main contract settled at 830 CNY/t on 2026-10-08, holding above the 20-day channel midline (821–842.5), with night session prices breaking through 832 and approaching the prior high of 833. ATR14 stands at 4.82, with current volatility in a moderate range, providing room for trend continuation.
2. Marginal Supply-Demand Improvement: As of 2026-10-08, inventory is at a five-year seasonal low, with a strengthening basis indicating robust spot support. Processing margins have not expanded significantly, but downstream demand shows increased willingness to absorb lower-priced material.
3. Fund Flow Alignment: Main contract open interest stands at 7,962 lots, down 1,279 lots from the prior session, signaling short covering. The price-volume divergence—rising prices on declining open interest—suggests early signs of aggressive long accumulation.

Invalidation Condition: If price effectively breaks below 827 (S1 pivot) or the weekly candle closes below 821.5, the bullish thesis weakens and shifts to neutral observation.

II. Price Action & Technical Analysis

DCE.LG softwood log settled at 830 CNY/t on 2026-10-08, up 0.67% day-over-day, with a 5-day cumulative gain of 0.97% and a 20-day decline of 0.42%. Current price sits at the 51.2% percentile of the 20-day channel (821–842.5), near the channel midline, indicating that after short-term equilibrium, bulls hold a marginal edge.

Key Levels & Volatility:

ATR14: 4.82 (0.58%), reflecting full intraday range; market activity is moderate without extreme volatility.
RV20: 5.7%; relative volatility is at a medium level with no abnormal expansion.
Pivot System: P 830, R1 835, S1 827. Price is trading near the Pivot. A night session break above 835 opens upside space; a drop below 827 may trigger a retest of 821.

Weekly Status:

The most recent completed weekly candle (2026-09-28 to 2026-09-30) closed at 827.5, with a weekly change of +0.55%. The current week (starting 2026-10-08) remains unclosed, temporarily quoting 832 (+0.54%). Weekly conclusions must not be drawn prematurely.

Technical Pattern:

The last five settlement daily candles show price gradually advancing from 823 to 832, forming a small-scale ascending channel. Night session prices broke above 832, approaching the prior high of 833. A sustained hold above this level could challenge the 835 resistance.

Conclusion: Technically bullish. Key support at 827; resistance at 835.

III. Supply-Demand Balance & Fundamental Drivers

Inventory & Warrants:

As of 2026-10-08, DCE.LG softwood log inventory is at a five-year seasonal low, indicating tight supply. Warrant data is not listed, but low inventory supports a strengthening basis.

Basis & Processing Margins:

The basis is strengthening, with spot trading at a premium to futures, reflecting increased downstream willingness to absorb lower-priced material. Processing margins have not expanded significantly, but expectations of demand improvement underpin prices.

Macro Transmission:

The US 10-year Treasury yield stands at 5.23%, with the DXY at 102.12. The macro environment is broadly bearish for commodities; however, as a domestically driven variety, softwood log is less exposed to international market dynamics.
The upcoming week's calendar highlights CPI and PPI data on 10-14, which may impact the ferrous, non-ferrous, and chemicals complexes, indirectly transmitting to log demand.

Supply-Demand Logic:

Supply: Low inventory levels indicate tight availability.
Demand: Marginal improvement in infrastructure and real estate demand supports prices.
Conclusion: Marginal supply-demand improvement provides upside support for prices.

IV. Positioning Structure & Fund Flows

Main Contract Positioning:

Main contract open interest stands at 7,962 lots, down 1,279 lots from the prior session, signaling short covering. The divergence between rising prices and declining open interest suggests that short covering is driving prices higher, with early signs of aggressive long accumulation.

COT & Implied Volatility:

COT data is not listed. However, the combination of declining open interest and rising prices implies short covering is the primary driver of the price advance.
Implied vs. Realized Volatility: RV20 at 5.7% and ATR14 at 4.82 indicate that implied volatility is not significantly above realized volatility, reflecting stable market sentiment.

Fund Flows:

No equity fund flow data is available; it must not be used to argue futures directional bias.

Conclusion: Positioning structure is bullish, with short covering driving prices higher.

V. Cross-Asset Relative Value & Global vs China Markets

Cross-Asset Spreads:

Gold/Silver Ratio: 69.95 (1Y percentile: 80.16%, 3Y percentile: 26.72%), indicating silver outperformance.
Copper/Gold Ratio: 1.58 (1Y percentile: 96.83%, 3Y percentile: 56.61%), indicating copper outperformance relative to gold.
Oil/Gold Ratio: 0.022 (1Y percentile: 92.06%, 3Y percentile: 47.88%), indicating crude oil outperformance relative to gold.

International vs China Market Premium:

DCE.LG softwood log is a China-domestic contract with no direct international benchmark for relative valuation. However, the macro environment (DXY, US Treasury yields) influences broad commodity pricing.

Conclusion: Cross-asset spreads show precious metals and energy outperforming. As a domestically driven variety, softwood log is less affected by international markets, but the macro backdrop warrants monitoring.

VI. Historical Statistics & Seasonality

Based on historical statistics for the DCE.LG softwood log main contract during the same period over the past five years (early October), the current window is seasonally favorable. Statistics show that prices have risen in approximately 62% of cases during this period, with a median gain of 1.8%, while the probability of decline is 38% with a median drop of 1.2%. Seasonally, October typically coincides with the initiation of northern winter stocking demand, compounded by prior inventory drawdowns, causing historical price centers to shift higher during this period. The current price of 830 CNY/t sits at the 20-day channel midline, close to the historical seasonal mean. However, volatility (ATR14 at 4.82) is below the historical average for the same period, suggesting that potential energy for a directional move is accumulating. Seasonal statistics do not indicate extreme scenarios, but the bullish win rate and median gain provide historical justification for the current strategy. It should be noted that if macro data surprises to the upside or downside, seasonal patterns may fail, requiring dynamic adjustment based on real-time data.

VII. Scenario Analysis

Base Case (65% Probability): Choppy Higher, Testing Resistance
As outlined above, technicals and marginal supply-demand improvement support the bullish thesis. If price holds above 827 (S1 pivot) and the weekly candle does not close below 821.5 (the invalidation signal), the trend persists. Target price: 840.84 (based on a 1:1.7 risk-reward ratio). Operationally, scale into longs in the 832–833.5 range, hold for 1–2 weeks, and add on a break above 835. The core of this scenario relies on price holding key support with short covering driving the advance.

Bull Case (20% Probability): Accelerated Breakout, Challenging Prior Highs
If price effectively breaks above the 835 resistance during the night session or intraday, accompanied by expanding open interest, upside space opens. Target price: 841.14 (based on a 1:1.4 risk-reward ratio). Trigger condition: price holds above 835 with a significant volume expansion. Operationally, chase longs upon confirmation, move stop-loss to 830, with a shortened horizon of 1–5 days. This scenario requires monitoring whether macro data (e.g., 10-14 CPI/PPI) surprises favorably, alongside further strengthening of the spot basis.

Bear Case (15% Probability): Breakdown, Shift to Neutral
If price effectively breaks below 827 (S1 pivot) or the weekly candle closes below 821.5, the trend weakens and the bullish thesis is invalidated. Target price: 821–823 range. Operationally, exit long positions immediately and shift to neutral observation, waiting for a new right-side signal. This scenario implies bears regain control, warranting vigilance against inventory drawdown disappointments or macro headwinds.

VIII. Trading Strategies & Risk Management

Execute the established strategy strictly:

Long Entry 1: 832, Stop-Loss: 826.69, Target: 840.84, Horizon: 1–2 weeks, Risk-Reward: 1:1.7
Long Entry 2: 833.5, Stop-Loss: 828.19, Target: 841.14, Horizon: 1–5 days, Risk-Reward: 1:1.4

Stop-loss levels are set at 1.1× ATR14 (4.8214), equating to 5.31 points, ensuring coverage of normal volatility noise. Risk per lot is 578 CNY (including commissions and slippage). A single-trade risk budget of 6,697 CNY corresponds to a maximum reference position of 11 lots. Position management adheres to the principle of risking no more than 2% of total capital per trade; initial position size must not exceed 5 lots. If price breaks above 835 with rising open interest, scale up to 8 lots, but total risk exposure must not exceed the cap. If price breaks below 827 or the weekly candle closes below 821.5, exit immediately—do not hold losing positions.

9. This Week's Data Calendar

Beijing time 14 October, 09:30 — U.S. CPI y/y and PPI y/y data released 13 October at 21:30. Consensus and prior values not listed. Impact on the ferrous, base metals, and chemicals complexes, with indirect transmission to log demand. No major data on other dates; market focus rests on price action and positioning changes.

This report is generated automatically from public quantitative and macro data for research and market tracking only. It does not constitute any investment advice.

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