Copper: September copper closed at $4.11 per pound on Friday in late trading, losing one point or 0.45% after trading as high as $4.17 during the session. Concerns over Greece’s debt crisis and whether or not the resolution proposed by Frances Sarkozy and Germany’s Merkel will prove successful. We do not believe the "temporary solution" offered will change anything if the rioting in Greece fails to allow the austerity programs to be implemented. Sell on any rallies since our expectation of the realization that a global recession persists will prompt further declines in demand.
Precious Metals: August gold closed at $1,539.10 per ounce tied to the selling in dollars on the expectation of a resolution of a Greece debt crisis. Heavy shortcovering in euro currencies and profittaking in the dollar also accounted for the strength in metals. July silver closed at $35.75 per ounce, up 19c but for the week silver lost 1.6%. We favor the sidelines with metals remaining in a trading range beneficial only to traders not investors. July platinum closed at $1,752.10 per ounce, down $8.60 with September palladium losing $18.10 per ounce to $745.40. The continuing concern that Japanese auto plants and parts facilities will continue to impede production lessens the need for the white metals which are used in auto catalytic converters. Stay out for now.
Grains and Oilseeds: December corn closed at $6.60 per bushel, up 7c on shortcovering in front of the weekend but posted a weekly decline. We like the long side of corn based on expected supply tightness.
December wheat closed at $7.53 ¼, down 1/2c also on shortcovering after selling off sharply early in the week. We prefer the sidelines. November soybeans closed at $13.33 ¼ per bushel, down 17c on improved crop outlook even against the selloff in the dollar. The U.S. Midwest crop is improving and yield potential forecast as better than earlier expected. We prefer the sidelines in beans.
Cattle & Hog report: August live cattle closed at $1.1020 per pound tied to the recent surge in cash prices. Stronger packer margins are indicative of better demand in the forecast. We like the long side of cattle. August live hogs closed at 94.85c per pound, down 0.375c on long liquidation after recent gains. August hogs had gained nearly a nickel per pound during the previous ten days and a correction was in order. Also futures moved to a premium to cash bids and that also was a factor in Friday selling. We prefer the sidelines in hogs
Coffee, Cocoa and Sugar: September coffee closed at $2.5305 per pound, down 8.1c after recently making a 14 year high. Brazil’s Agricultural ministry predicts coffee output will decline by 9.5% but Mays exports were up 3.7%. We favor the sidelines in coffee until it re-establishes its bullish trend after the correction is completed. September cocoa closed at $2916 per tonne, up $30. Concerns over cocoa deliveries to Ivory Coast fell 48% in June from the previous year. Predictions that global production, however, will increase by 10.9 for the 2010-11 period could put pressure on prices. We still like the long side of cocoa. October sugar closed at 25.29c per pound, up 36 points on export delays from Brazil and the weak dollar on Friday. We prefer the sidelines.
Cotton: October cotton closed at $1.2961, per pound, up 2 15c mostly against the weak dollar. Selling in cotton has been dominant after it made the high of $2.27 per pound in March, the highest in 140 years of recorded price history. We favored the short side for some time and still see some downside potential but a correction is in order so we moved to the sidelines.
John L. Caiazzo