PFGBEST Softs Comment

CHICAGO - Mar 2/10 - SNS -- Following is the orange juice, cotton and coffee comment from PFGBEST Research.

The Soft Spot(2)

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Boy, what a difference a day makes. It seems as if every day we are seeing conflicting economic numbers. Thursday's durable goods number release was better than expected. But weekly initial jobless claims were higher than expected. At first glance, this tends to be confusing and muddies up the picture. My thoughts are that this is a sign that we are recovering from the recession.  You know you're near the bottom when you have to look up to see down!

Coffee 02/26/2010

Life Time Trading Range 41.50 Cents  - $337.50 per Pound

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

Coffee is in a corrective state at this time. Even though there are supportive fundamentals, the Coffee market has decided it's time to take a breather. Most, if not all commodities, are eyeballing the negative macro-economic situation and heading lower. Eventually the fundamentals will take hold and knock some sense into the market, but always remember the market is right ' don't fight it. Listen to what the market has to say as it takes precedence over anything else.

The ICO (International Coffee Organization) released consumption numbers above expectations this week. Their production report came in lower than expected.  Colombian   has remained hot and dry and is desperately in need of rain.

Perhaps the threat of a Brazilian 2010-11 bumper crop is too much for the Coffee market to bear?

The daily chart indicates that a down flag is presently being traced out that could very well see May Coffee trade at 122.00. The daily MACD histogram at -.14 looks as if about to jump off a cliff, and the daily R.S.I. is at a bearish 39.00. The weekly chart shows the Coffee market is presently in a down trending mode.

May Coffee must close above 139.00 Friday to turn the weekly trend up.

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

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 are a specialty.

Cocoa 02/26/2010

Life Time Trading Range $444 ' $5379 per Tonne

Trades on The ICE 3 AM ' 1 PM CDT

The Cocoa market is still very much concerned with economic recovery. The largest consumers of Cocoa are Europe and North America.   The United States consumes 13%, the United Kingdom 9%, France 7% and Germany7%. There was news this week of a decline in German business sentiment for the first time in about a year. Thoughts are that more aggressive stimulus will be needed to right the economic condition of the United Kingdom. Economic problems in the Euro Zone continue to pressure Cocoa prices. This situation has seen funds covering long positions and taking to the sidelines. Until the macro-economic picture improves I don't expect the funds to be active in Cocoa.

Ivory Coast main crop progress is further along than it was at this time last year, and mid crop Cocoa is developing very well. Favorable weather and the absence of disease are creating a bountiful crop. There are absolutely no threats to the supply side at this time. This does not bode well for Cocoa bulls.

Technically speaking, May Cocoa looks to be headed to the 25.00 area. I see no reason to be long Cocoa at this time. Any strength we see in this market will be attributed to short covering, and it shouldn't be long lasting.

I recommend shorting Cocoa on strength by selling futures, purchasing puts, or put spreads.

May Cocoa must close below 30.80 Friday to turn the weekly trend down.

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

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 are a specialty.

Cotton  02/26/2010

Life Time Trading Range $26.84 ' $117.20 per Pound

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

The latest U.S. Cotton export number came in at 113,300 tonnes. A bit on the low side, but as expected. Celebration of the Chinese New Year saw China removed from the marketplace. Three countries: Mexico, Turkey and China consume close to 50% of the U.S. Cotton crop. The only real threat to our exports is India, which produced 25 million bales for the 2009-10 crop year versus 12.5 million produced in the U.S.. Reduced world cotton stocks have been the engine driving prices higher. Deliveries against the ICE March Cotton contract stand at over 3100.

Being the leading indicator that it is, the market action in Cotton is telling us we are recovering from the recession. I know that there are economic numbers being released that don't appear too rosy, but we must remember these are lagging indicators.

Cotton showed little weakness following its initial rally of twelve plus cents. It was however, enough weakness to get long futures or buy call spreads. Did you? Cotton again put in new contract highs late this week. The bears ought to put their wagons in a circle.

This bull move may see more than the estimated 10.5 million acres planted with Cotton. This ends three consecutive years of declines. Hopefully the growers will think long and hard before greed sets in.

I implore you not to chase this market. It will spank your account hard if your timing is off.

I recommend buying Cotton futures or call spreads on weakness.

May Cotton must close below 76.60 Friday to turn the weekly trend down.

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

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 are a specialty.

Sugar 02/26/2010

Life Time Trading Range 2.30 Cents ' 66.00 Cents per Pound

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

Brazilian Sugar mills will be on the job in short order. Count on close to 40% being operational by the end of March. This is a couple of weeks earlier than usual. Two sizable Sugar tenders, one from Egypt and the other from Pakistan, have failed to take place. Ethanol prices have been working lower of late. This again opens the door for Brazil to funnel larger quantities of Sugar for use in edibles and less to ethanol refiners. So, even though Sugar production may remain steady, the supply of edible sugar will increase. The probability of a record harvest from Brazil is very high. The EU has approved the export of close to 100,000 tonnes of Sugar over and above the quota set by the World Trade Organization. This has been labeled as illegal by some market participants. I'd have to bet that those crying foul are long Sugar. What do you think? Funds, which had been heavily long Sugar, have been liquidating a large portion or their holdings.

There has been some buying interest at lower levels but this analyst does not see that as being bullish. Not long ago everyone and their brother were in need of Sugar. Now they are getting a double dose of good luck; the ability to buy at lower prices and almost as much as they want! This is actually bearish as it removes demand from the marketplace.

As I wrote last week, Sugar did not look good technically and could very well see the 23.00 area, and that's just what it did! I don't have a crystal ball, but the technical analysis skills I've learned over the last 30 plus years can be quite accurate at times. The major support resides at the 22.00 area at this juncture. I highly doubt that Sugar will close strong enough to turn bullish.

I recommend selling Sugar futures or purchasing put spreads on strength. (Rallies)

May Sugar must close above 26.57 Friday to turn the weekly trend up.

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

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 are a specialty.

PFGBEST Research Team

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

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