Grains and Oilseeds: March corn closed at $6.57 ¼ up 3 1/4c on good export demand. Strength in the wheat pit also helped. We prefer the sidelines for now. March wheat closed at $8.24 ½, up 21c on strong business from foreign governments concerned about potential protests tied to high food prices. Tunisia’s President was removed tied to those food price protests. We prefer the sidelines in wheat even as grain prices remain in an uptrend. March soybeans closed at $14.12 ¼, down 2c in quiet lackluster trading. With the potential for lower 2011-2012 carry over and offsetting crop acreage planted we could continue to see sideways trading. The only question would be how large a trading range before some data causes as push through either support or resistance. For now recent highs that had been tied to concern over a poor Argentinian crop has dissipated and the recent strong demand from China also has levelled off. We are on the sidelines for now.
Coffee, Cocoa and Sugar: March coffee closed at $2.4035 per pound, down 5 points after touching 13 year highs. The International Coffee Organization expecting Brazilian Arabica bean output to fall also a factor in the recent strength. We prefer the sidelines but expect the bullish trend to continue. The downside potential is too risky for retail clients. March cocoa closed at $3211 per tonne, up $27 tied to the European Community sanctions on the Ivory Coast which may cut available supplies. Civil unrest may also cut production and add to upward price pressure. We prefer not to get involved in geopolitically affected commodities. March sugar closed at 32.36c per pound, up 3 little points after recent price gains to 30 year highs. The 80% year on year decline in output in Brazil’s Center South, the world’s largest producing region and flooding in Australia, the third largest sugar exporter, may also cut sugar output and prompt still higher prices. However, with China’s steps to curb inflation, demand for commodities could be cut and that would impact sugar, which is heavily used in China. We prefer the sidelines.
Cotton: March cotton closed at $1.5694 per pound, up 4c on Chinese demand and Australian floods which decimated cotton crops. However, India’s CAB indicated that cotton output could be higher than recent estimates. With recent USDA estimates cutting global carryover to a 15 year low, we could see further strength. We prefer the long side but only with stop protection.
John L. Caiazzo
Information provided is from sources deemed to be reliable but not guaranteed. Futures and Options trading involve a high degree of risk and may not be suitable for everyone. John Caiazzo is a registered commodities broker with over 40 years experience in investments and opinions are his own and not of the Futures Commission Merchant to which he introduces his clients.