Meats: February cattle closed at $1.2040 per pound down 55 points on the strong dollar and reduced demand concerns tied to global economies. We still like cattle but would use stop protection on any new purchases. Hold current positions and stops. Herd reductions through increased slaughter could bring support later. February hogs closed at 84c per pound up 1.5c on shortcovering after recent selling. We prefer the sidelines in hogs.
Coffee, Sugar and Cocoa: March coffee closed at $2.2160 per pound, up 2.05c on concerns that India may reduce exports according to coffee industry group, Coffee Exporters Association of India. Another factor in the buying was concern over Colombia coffee production. We like coffee and would add to long positions or buy calls around current levels. March cocoa closed at $2020 per tonne down $8 on continued long liquidation. We remain positive for cocoa after prices had declined 31% last year and we anticipate some fundamental changes from Ivory Coast or Ghana due to low prices. We could see reduced exports as farmers hold back deliveries. The strong dollar had little impact on prices and demand for chocolate, reduced by economic conditions in Europe and the U.S. caused last years sharp price declines. Any buying, as with other softs, should include stop protection. We suggest call purchases rather than outrights for retail clients. March sugar closed at 23.29c per pound, up 16 points. Shortcovering after recent weakness prompted by the strengthening dollar a factor. We like sugar for a move over 25c per pound basis the March contract. Use stop protection on outrights. Go further out for call purchases.
Cotton: March cotton closed at 95.86c per pound on Friday up 1.12c on shortcovering as technical conditions improved after recent heavy long liquidation by commodity funds. Concern over crop conditions in India and the USDA cutting its forecast for Indian cotton production also a factor in the formation of a base for cotton prices. We continue to favor the long side of cotton for a move back over a dollar to the $1.10-1.15 level.
John L. Caiazzo