Meats: February cattle closed at $1.2470 per pound, up 15 points and the highest closing price since early November. Indications that packers will have to pay up in the cash markets and tightening supplies of available feedlot cattle a positive factor for cattle. The weak dollar also a factor. We continue to favor the long side of cattle even as our recently stated goal of $1.25 is close to fruition. The trend remains positive for cattle. February hogs closed at 86.675 per pound, up 72.5 points to their highest price since early December but lower loin prices could pressure prices once the U.S. dollar stabilizes. We prefer the sidelines in hogs.
Coffee, Sugar and Cocoa: March coffee closed at $1.1760 per pound, down 2.10c on long liquidation even against the weak dollar. Higher expections for world coffee output and higher than expected production from Ethiopia pressured prices. We prefer the sidelines in coffee. March cocoa closed at $2176 per tonne, down $21.00 on long liquidation tied to slower European consumption figures. We are on the sidelines after having been bullish for cocoa. March sugar closed at 24.21c per pound, down 52 points on profittaking. Recent reports that E.D. & F. Man, a major factor in sugar had hired Continental Farmers Group to grow Ukrainian beet against other operators cutting production on concerns that prices are too high and looking for a correction. We could see continued pressure on sugar but any decline back to the 21-22c level could be a buying opportunity.
OJ: March orange juice closed at $2.1185 per pound of concentrate, up 5.25c and into new high ground. The ongoing concern that certain imported oranges contain pesticide may prompt shortages that cannot be made up by Florida prompting short covering and new buying. We continue to feel that the FDA, in assessing the lower levels of pesticide, may allow the continued importation of oranges but psychologically buyers of juice may continue to prefer only Florida origins. We do not expect the "hysteria" to continue and would look to buy put options on OJ.
Cotton: March cotton closed at 96c per pound, up 41 points and remains in a narrow range at recent lows. Recently reported slowing of cotton deliveries from India and possible hoarding by farmers could prompt new buying. We like the long side but only through call option purchases.
John L. Caiazzo