Jobs report ripples through financials, commodities

Treasuries rally on weak jobs numbers

Grains and Oilseeds: May corn closed at $6.58 ¼, up 1 1/2c on continued strength from exports. China appears to be adequately supplied through May so some profittaking may be in order. However, U.S. farmers plan to plant more acres to corn in 2012 than any year since 1937 account to the USDA report released last week. That could produce the largest corn crop with resulting pressure on prices going forward. We prefer the sidelines in corn. May wheat closed at $6.38 ½, down 3/4c on pre holiday weekend profittaking. With winter wheat crop off to a good start, we could see additional pricing pressure and would avoid wheat for now. May soybeans closed at $14.34 per bushel, up 14 1/2c on continued buying attributable to the USDA report. With Brazils reduced expectation for the soybean harvest, prices have climbed steadily but are now up against technical resistance which could bring some profittaking. We have favored the long side of soybeans for some time and maybe taking some profits "off the table" is appropriate.

Meats: After "over-achieving" our price goal of $1.25 per pound peaking at $1.28 in late February, cattle have been under pressure tied to reduced demand expectations. June cattle closed at $1.15825, up .07 points on shortcovering after recent losses. We now see some support at current levels and would be inclined to get back in on the long side of cattle. June hogs closed at 93.3c per pound, up from 91.9 on Wednesday on shortcovering and up on the week. Traders considered the recent lows as a bottoming effect for hogs and retailers were expected to re-establish stocks for pork products. We favor the sidelines in hogs.

Coffee, Cocoa and Sugar: May coffee closed at $1.83 per pound, down 1.75c against the strong dollar Thursday but remains in a wide price range established recently. After reaching $2.20 level in early February, prices have declined sharply but have now appear to have established a double bottom around the $1.77 level. The We prefer the long side but only with stop protection. May cocoa closed at $2100 per tonne up $17 on shortcovering after recent selling pressure took prices down from the February highs around $2,450. We like cocoa from here but due to the volatility, stop protection is a must. May sugar closed at 24.54c per pound, up 12 points at around 50% of its recent range. As with cocoa, a short term base seems to have formed and we would buy sugar but with stops. Concern that the Brazilian cane may not produce from the center-south growing region and the flood damage to Thailand, the second ranked exporter after Brazil could prompt new buying. We like to "jump on the bandwagon" but using stop protection as usual.

Cotton: July cotton closed at 88.39c per pound, down 87 points after trading as high as 90.29c during the session. Recent losses tied to cancellations by China and Brazil could extend into this coming week so we would be cautious about holding long positions on any further declines. Let the stops work and if you get stopped out, look for another place to get back in after the "smoke clears" and new fundamentals emerge.

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About the Author
John L. Caiazzo

Website: www.acuvest.com

E-mail: futures@acuvest.com

Information provided is from sources deemed to be reliable but not guaranteed. Futures and Options trading involve a high degree of risk and may not be suitable for everyone. John Caiazzo is a registered commodities broker with over 40 years experience in investments and opinions are his own and not of the Futures Commission Merchant to which he introduces his clients.

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