PFGBEST Softs Comment

CHICAGO - Dec 9/09 - SNS -- Following is the orange juice, cotton and coffee comment from PFGBEST Research.

The Soft Spot

TRADE RECOMMENDATIONS UPDATE   12 07 09   SEE COFFEE BELOW

Robin's Rant

World population growth continues to build. It is presently a hairs breadth away from seven billion and is not stopping there.  S-E-V-E-N B-I-L-L-I-O-N? Do we realize what it will take to feed and clothe all of those faces? This in and of itself has created a bullish foundation for commodities. In 1976 when I began my career in the futures industry the world's population stood a shade over four billion. I don't believe that the world population formerly played as important a role in the supply demand quotient as it does today. I'm not saying it wasn't a factor but, this perpetual growth will cause world population to come to the forefront of the supply demand quotient.

Commodities are positioned to begin a new leg to the upside. The CCI (Original CRB) Index had been treading water just below 438.00 for more than a month. This is the 50% retracement area of the deleveraging break of 2008 -2009. It has now broken through to the upside and presently stands at 487.00.  A move to the 500.00 area is in the cards and El Toro is preparing for a charge!  The markets are embroiled in one of the most bullish situations I've ever experienced.

Coffee 12/03/2009

Life Time Trading Range 41.50 Cents  - $337.50 per Pound

Trades on The ICE 2:30 AM ' 1 PM CDT

New highs in gold and new lows in the U.S. Dollar will serve to support higher prices in Coffee. The exceedingly large amount of rainfall in Brazil during harvest resulted in a much larger than anticipated quantity of Coffee to be downgraded in quality. As mentioned in 'The Soft Spot' prior, a tightness of supply in high quality Brazilian Coffee exists. This situation has led to an even tighter situation and higher Coffee prices. There has been talk of increased buying of Coffee futures by index funds. Open interest rose close to 5,000 contracts on November 30^th over the previous trading session. This is viewed as friendly to the market. The Brazilian crop estimate released last week at 44 million bags is below the commercial estimates of 45 to 55 million bags. Not a good time to be short Coffee. At least not the way I see it.

On a weekly basis Coffee has broken out to the upside of an ascending wedge. This could very well be the start of something big! It would take a close Friday below 130.00 in the March contract to turn the trend down.

Do not trade without protective strategies such as stops and or options.

To open an account with Robin E-Mail  rrosenberg@pfgbest.com or telephone 800.611.6974.

You can open an account online in a matter of minutes, or if you prefer a paper account form we will send one your way. Direct to floor order execution where possible. Options a specialty.

TRADE RECOMMENDATIONS UPDATE   12 04 09

Long March Coffee from 14005.   Stop is 13845. Objective is 14605.

Bill Gordon   Senior Technical Analyst   312 563 8280   800 935 6493   bgordon@pfgbest.com

TRADE   RECOMMENDATIONS UPDATE   12 07 09

Sold March Coffee at Objective of 14605. Was long from 14005.

Cocoa 12/03/2009

Life Time Trading Range $444 ' $5379 per Tonne

Trades on The ICE 3 AM ' 1 PM CDT

Yes, I know I'm beginning to sound like a broken record (turntables are back ' with USB interfaces no less) but a weaker U.S. dollar supports higher prices for commodities priced in U.S. Dollars. In my opinion, the administration is allowing the U.S. dollar to fall in order to boost U.S. exports. Wednesday's dollar strength caused investment funds to back away from Cocoa and hedger selling caused prices to retreat somewhat. Thursday morning as I write this Cocoa is up .53 at 33.80. And guess what? The U.S. Dollar Index is down .20. If the sensitivity to the dollar continues Cocoa will more than likely make a run at the contract high put in during October.

Fundamentals related to Cocoa don't support prices at this level.  Just the size of the harvests in Ghana and the Ivory Coast would normally be enough to bring on lower prices. Presently increased grinder demand for Ivory Coast Cocoa has served to neutralize the effect of that large supply. Sometimes markets confound even the savviest of traders, I believe this to be one of those times.

March Cocoa must close below 32.59 Friday to turn the trend down.  

Do not trade without protective strategies such as stops and or options.  

To open an account with Robin E-Mail  rrosenberg@pfgbest.com or telephone 800.611.6974.

You can open an account online in a matter of minutes, or if you prefer a paper account form we will send one your way. Direct to floor order execution where possible. Options a specialty.

 TRADE RECOMMENDATIONS UPDATE

Short Dec Cocoa from 3385 today.   Stop is 3455. Objective is 3155.

Bill Gordon   Senior Technical Analyst   312 563 8280   800 935 6493   bgordon@pfgbest.com

Sugar 12/03/2009  

Life Time Trading Range 2.30 Cents ' 66.00 Cents per Pound

Trades on The ICE 2:30 AM ' 1 PM CDT

The growing list of bullish fundamentals affecting sugar served to overpower U.S. Dollar strength Wednesday and rallied the Sugar market sharply. Today as I write this Sugar is up .25 at 2329. Let's review the bullish fundamentals. There is an expected increase in future demand from Pakistan and India. India's Farm Minister has said that India's imports may reach as high as 9.5 million tonnes. This is far in excess of the 5 million tonnes traders have been expecting. Chinese Sugar futures were up the limit of 4% yesterday following the Chinese government's failure to release 500,000 tonnes of reserve sugar they had said they would. There is also a rumor circulating that Indonesia will soon be in the market for 500,000 tonnes of Sugar.

 On a weekly basis Sugar is just above the center Bollinger band and above the nine bar moving average. This is a bullish development. March Sugar must close below 22.64 Friday to turn the trend down. What we presently have here is an extremely strong, bull market in Sugar.  

Do not trade without protective strategies such as stops and or options.

To open an account with Robin E-Mail  rrosenberg@pfgbest.com or telephone 800.611.6974.

You can open an account online in a matter of minutes, or if you prefer a paper account form we will send one your way. Direct to floor order execution where possible. Options a specialty.

Cotton  12/03/2009

Life Time Trading Range $26.84 ' $117.20 per Pound

Trades on The ICE 8 PM ' 1:30 PM CDT (Next Day)

Cotton, being an industrial commodity, will move pretty much in lockstep with the economy. Economic reports released Tuesday were a bit soft but did indicate that there is some expansion taking place on the economic front. Pending home sales came in at a three year high; the ISM Manufacturing Index was below expectations and construction spending basically flat.

Cotton consumption is below the USDA 2009 estimate of 3.4 million bales. Consumption will be the lowest in over a century! Cotton futures though are heading higher. Now is the time to take advantage of the supply shortages that are almost sure to follow. Now why do I say this?  Are you familiar with the classic Inventory Cycle? When prices are low, no one wants to be caught holding product. Business is conducted on an as needed basis. However, when demand begins to improve, suppliers are caught with little product in inventory. Now they enter the market and start buying to restock. Guess what happens next? Prices begin rising. Well, they continue buying until there is a glut of product on the shelves. Now there is far too much product available, buying dries up, selling ensues and down go prices. Sounds simple no? But we all know, or should know, that it's timing that makes the trade.

On a weekly basis Cotton is above the 61.8% retracement of the deleveraging break of 2008 -2009.  Cotton would have to close below 73.79 Friday to turn the trend down.

Do not trade without protective strategies such as stops and or options.

To open an account with Robin E-Mail  rrosenberg@pfgbest.com or telephone 800.611.6974.

You can open an account online in a matter of minutes, or if you prefer a paper account form we will send one your way. Direct to floor order execution where possible. Options a specialty.

PFGBEST Research Team

Phone: 800-361-6855 or 319-553-2181

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