Coffee, Sugar and Cocoa: March coffee closed at $1.2595 per pound, up 35 points against the weak U.S. dollar and expectations that an improving U.S. economy will improve consumption. The recently reported decline in Colombian coffee output is also a factor supporting coffee prices. We continue to like coffee from the long side but only with stop protection. March cocoa closed at $2,300 per tonne, up $75 on shortcovering. Flooding reported in Australia also supported cocoa prices. We like cocoa but as with most commodities during the time of dollar instability stops must be used. March sugar closed at 23.94c per pound, up 46 points which also can be attributable to Australian flooding but technical support at 22-23c also a factor. We like sugar for a move to the 25c level but use stop protection or the purchase of call options which limits risk to premium.
OJ: March frozen concentrated orange juice closed at $2.0145 per pound, down 2.55c on profittaking after the recent runup tied to concerns over pesticides in imported product. We favor the short side on any further rallies as the "pesticide" concerns may be totally overdone.
Cotton: March cotton closed at 96.34c per pound, up 2.13c tied to weak dollar but also on concerns that Australian flooding in the growing areas will be reducing production from this major producer. July cotton closed at 98.45c up 1.89c. We continue to feel the recent selling late last year and early this year has been overdone and we look for cotton prices to return to the $1.10-$1.20 level. We like the July contract from here.
John L. Caiazzo