Grains and Oilseeds: March corn closed at $5.83 per bushel, up 4c on concerns that poor weather may reduce production. For the week however, corn lost 1.9%. We continue to favor the long side of corn but only on a scale down basis. March wheat closed at $5.83 ¾ per bushel, up 4 1/2c also tied to hot dry conditions as well as the weak dollar on Friday. We prefer the sidelines in wheat. March soybeans closed at $11.39 ½ per bushel, up 18 1/4c also tied to concerns that adverse weather could reduce yields in Brazil and Argentina and create new demand for U.S. supplies. We continue to favor the long side of soybeans.
Meats: February cattle closed at $1.1850 per pound, down 65 points on shortcovering after recent weakness and tied to the weak dollar on Friday. Demand declines also a factor on the weakness with cattle futures losing 0.2% for the week after losing 3.9% the prior week. We had liked the long side of cattle but would not add to existing positions until fundamentals improve. February hogs closed at 83.15c per pound, down 2.275c also tied to pre holiday slack demand. We prefer the sidelines.
Coffee, Sugar and Cocoa: March coffee closed at $2.1520 per pound, down 2.55c and settled at the one year low tied to inventory gains. We prefer the sidelines but with an eye to the long side on any further weakness. March cocoa closed at $2,100 per tonne, down $81 on profittaking but managed a 1.6% gain for the week. We could see further buying and like cocoa for a move, basis the March contract, to the $2,300 $2,350 level. March sugar closed at 23.09c per pound, up 34 points or 1.5% for the week. However sugar prices have lost 28% for 2011. Selling was met with light trade buying at the days lows. Brazilian Sugar production was reduced by poor weather but other growing areas made up for it. China had sold much of its sugar at its auction during the week but may have to import sugar to maintain price controls. We could see renewed interest in sugar tied to light domestic supplies but we prefer the sidelines. Hold put positions.
Cotton: March cotton closed at 86.29c per pound, unchanged but disappointing export sales reported by the USDA could bring selling pressure during the week. Bad weather forecast for the U.S. along with India offering cotton at lower prices could continue to pressure prices. We prefer the sidelines after having recommended the short side for some time.
John L. Caiazzo