Copper: December copper closed at $3.99 per pound, up 1 tick in late trading after touching $3.94 during the session. We remain bearish for copper having first suggesting shorting it around $4.75 per pound level. With inventories at the LME up 650 tons to 463,625 indicating reduced European demand and Shanghai Exchange stocks down 8,805 tons to 112,014, indicating possible increased Chinese demand we could see sporadic wide price swings and would stay out for now. Copper prices are down 0.7% for the week.
Precious Metals: December gold closed at $1,852.20 per ounce, up $30.20 as money moved from equities to the safe havens of Gold and Treasuries. We are concerned that while gold may continue higher and exceed $1900 per ounce, any correction could be quick and severe. Our suggestion to holders of gold would be to buy put options to protect their positions. I personally like the $1,500 or $1,600 December puts as “insurance”. The precious metal has come “too far, too fast”. September silver closed at $42.43 per ounce, up $1.74 and its highest settlement since May 3rd on the way down from near the $50 level. We prefer the sidelines. October platinum closed at $1,874.90 per ounce, up $27.20 and December palladium lost $3.20 to close at $755.55. We would avoid these markets as the risk at current levels is too great for our clients.
Grains and Oilseeds: December corn closed at $7.255 per bushel, up 12.5¢ tied to weather and the U.S. dollar decline. Corn yields are of concern and anticipated precipitation is needed. We like the long side of corn since production delays could reduce yields. December wheat closed at $7.61 ½, up 22c on short covering and dollar weakness. Tight supplies and later than normal plantings also a factor. We prefer corn to wheat. November soybeans closed at $13.68 ½ per bushel, up 7 1/2c tied also to the weak dollar and concern over yields. We like soybeans from here also but with stop protection.
Cattle & Hog report: October cattle closed at $!.1550 per pound, up 1 cent in sideways trading with a high of 1.1610 and a low of 1.1487. We continue to favor the long side of cattle as herds were culled due to high feed prices and it will take time to recover. October lean hogs closed at 88.375c per pound up 15.5c tied to higher cash prices and expected additional purchases by South Korea and China. While we had favored the short side of hogs and the long side of cattle, we would hold off any new sales of hog futures.
Coffee, Cocoa and Sugar: December coffee closed at $2.6690 per pound, down 1.5c on profit taking after recent gains. Sales withhold by Brazil and Colombia and Central America only selling new crop as the old crop is sold out could support prices further. We like coffee from here for a potential price move basis the December to the $2.70 to $2.75 area. December cocoa closed at $3.010 per tonne, up $25 on short covering after recent weakness. Selling pressure from Ivory Coast and other western African countries could keep prices in line but we could see weather affecting cocoa and would hold long positions. October sugar closed at $3080c per pound, up 1.68c tied to the U.S. dollar weakness and loss of sugar production by Brazil due to poor weather. We could see sugar prices move to the 31c level before bumping into overhead resistance.
Cotton: October cotton closed at $1.0676, per pound, down 79 points tied to the global economic situation which would curtail demand. However poor production in the U.S. and Pakistan could prompt a new round of buying. The current drought in the cotton areas of Texas persists as problematic. We had been bearish from the $1.50 per pound level and now would cover shorts and add a few longs.
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 and opinions are his own and not of the Futures Commission Merc