Copper: July copper closed at $4.4040per pound, up 4.5c on Thursday against the week dollar and the strength in equities. Positive corporate earnings also a factor in the shortcovering Thursday. We continue to be bearish on copper on the basis that global economies are, in our opinion, not in recovery. For the week copper lost 2.2%. Hold put positions.
Precious Metals: While much of media attention is directed at gold, silver has consistently performed better gaining an average of 3 times the daily percentage gains of gold. On Friday for instance gold gained 0.40% while silver gained 4.83%. There is no comparison and why the media attention is on gold, we have suggested for some time that silver was a better investment during times of dollar weakness and inflation fears. Since July of 2010 gold has gained 18% from $1240 to $1503 per ounce. Silver however, has gone from $17.60 to $46 per ounce or over 150%. There is really no comparison and why the "gold bugs" are ignoring the better returns for silver is a question of priorities. There is probably a higher dollar commission for marketing gold than there is for silver. Unfortunate for the investing public, in my opinion. June gold closed at $1,504.90, up $6.00 on Thursday for a gain of 0.40% while July silver closed at $46.625 per ounce, up $$2.1480 for a gain of 4.83%. July platinum closed at $1817.60, up $14.80 while June palladium gained $11.85 to close at $770.75. Our favorite spread long palladium short platinum shoed palladium gaining 1.56% against platinum’s 0.82% gain. Stay with that spread. As far as gold and silver are concerned, we are expecting a correction on any dollar stability so avoid new positions.
Grains and Oilseeds: July corn closed at $7.44 ½ per bushel, up 4c on shortcovering following reports that wet weather in the growing areas of the U.S. could delay plantings. We prefer the sidelines in corn. July wheat closed at $8.34 ¾ per bushel, up 14c per bushel tied to poor weather threatening production. Extreme dryness in the winter wheat areas along with heavy rains delaying plantings of spring wheat prompted the buying across the board. We like the long side expecting the numbers to substantiate our bullish opinion. July soybeans closed at $13.89 ¾ per bushel, up 20 1/2c on better than expected export sales. We like soybeans from here as well.
Coffee, Cocoa and Sugar: July coffee closed at $2.9455 per pound, down 4.9c after recent concerns over supply shortages subsided. We prefer the sidelines in coffee. July cocoa closed at $3088 per tonne, down $18 as Ivory Coast political problems may be resolved and production is expected to increase. We are also on the sidelines in cocoa but could expect additional long liquidation. July sugar closed at 23.8c per pound, up 27 points tied to higher crude prices and the lower dollar. Brazil will start harvesting soon and expectations are that due to higher crude prices, additional sugar could be used to produce ethanol. We could see further price gains and suggest putting on a few longs for well capitalized clients.
Cotton: July cotton closed at $1.6751 per pound, up 45 points even against lighter than expected export sales due to continued drought in China and the weak dollar. We continue to favor the short side of cotton and would add to put positions on any rallies.
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.