Grains and Oilseeds: May corn closed at $6.44 per bushel, up 1 1/2c on shortcovering in front of the weekend. With corn plantings expected highest since World War II and slowing demand for use in ethanol, prices could come under pressure in the near term. However, our long established policy of not shorting "anything that grows", still applies. Wait for a setback and then take another look. May wheat closed at $6.41 1/4, up 1/4c also tied to bearish USDA forecasts. Stand aside wheat and corn. May soybeans closed at $12.86 ¾ per bushel, up 3 1/4c on reports that record exports could reduce reserves to a three year low. Improved demand from China also a factor in the buying. We continue to favor the long side of soybeans from here.
Meats: April cattle closed at $1.2950 per pound down 17.5 points on profittaking after recent strength tied to shrinking herd sizes. We continue to favor the long side of cattle but bring up your trailing stops. April hogs closed at 89.725c per pound, up 1.25c on shortcovering after recent weakness. Hogs benefitted from record high prices for cattle which may switch some demand from beef to pork. We like the sidelines in pork.
Coffee, Sugar and Cocoa: May coffee closed at $2.0405 per pound, up 2c on tight supplies forecast and the weak dollar. Improved economic data supports demand ideas against supplies. We have liked the long side of coffee and prices could manage further gains. Stay long but raise trailing stop. May cocoa closed at $2,367, per tonne, up $23 tied to the weak dollar. We prefer the sidelines in cocoa. May sugar closed at 25.22c per pound, up 36 points and remains on our favored list. Hold long positions but raise stop protection. The potential for a dollar rally could prompt long liquidation.
Cotton: July cotton closed at 91.35c per pound up 74 points on exports to China and the weak U.S. dollar. However China buying may be ending and that could prompt selling pressure. We have been positive on cotton since the sharp decline from the June 2011 high of $1.17 to the mid December low of 84c but prices appear to have stalled at current prices. We could see further gains to the 93c level but raise the trailing stops in the event of additional negative fundamentals.
John L. Caiazzo