Coffee, Cocoa and Sugar: May coffee closed at $2.7380, up 1 full penny per pound on strong demand and supply concerns. The strength in arabica beans hit the highest level since May of 1977 Friday on concern over availability of quality beans. We prefer the sidelines for now but traders could buy the dips with close stops. On Thursday the United Nations Food and Agriculture Organization said its "food-price index rose 2.2% in February" and tied to the high energy costs created by turmoil in the crude producing countries, inflation is a reality in our opinion. May cocoa closed at $3,850 per tonne, up $7.00 and continues to be effected by Ivory Coast concerns. Cocoa hit a 32 year high tied to political violence in Ivory coast which may effect deliveries out of that country. May sugar closed at 29.89c per pound up 1 point and seems to have bumped into overhead technical resistance. We prefer the sidelines but demand could prompt new buying.
Cotton: May cotton closed at $2.1270, up the 7c limit again, and a record high on Friday. Cotton has now doubled in price over the last six months. Smaller crops from India, Pakistan and China have impacted global stocks. Also continued hoarding by Chinese farmers a factor. However, while demand remains strong U.S. exports are up over 41% this season over last year according to the USDA. We feel cotton is overdone and we would look to buy cotton puts on the July contract.
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.