Equity indexes face tough recovery with Europe turmoil looming

Financials, commodities facing key developments

Grains and Oilseeds: May corn closed at $6.29 ¼ per bushel, down 8 1/4c mostly tied to profittaking after recent strength from export reports and the strong dollar. We prefer the sidelines in corn but with expected heavy tornado activity in the mid-west, we could see some rice gains. May wheat closed at $6.23 ½ per bushel, down 15 3/4c tied to the strong dollar and concern of reduced demand from China due to their economic report. May soybeans closed at $14.36 ¾ per bushel down 4 1/4c on profittaking after recent strength tied to export data and the strong dollar. We continue to favor the long side of soybeans.

Meats: June cattle closed at $1.1607 per pound, down 1.08c against the strong dollar and possible demand decline tied to the lower than expected Chinese economic growth. We had favored the long side of cattle with our goal of $1.25 per pound, which had been achieved. We are awaiting further fundamentals before considering adding to any open positions but technically we may have seen the bottom. June hogs closed at 90.22c per pound, down 3c on the strong dollar after its recent shortcovering rally against the longer term downtrend from $1.00 per pound. We prefer the sidelines in hogs.

Coffee, Cocoa and Sugar: May coffee closed at $1.7920 per pound, down 3.7c on continued price basing after the recent sharp decline. We like the long side of coffee from here. May cocoa closed at $2248 per tonne, up $88 on lower than expected European cocoa grind data which could portend reduced supplies going forward. We continue to favor the long side of cocoa with our interim goal around $2,450-$2,500 per tonne. May sugar closed at 23.37c per pound, down 85 points on continued selling pressure after recent highs but also against the strong U.S. dollar. We had preferred the long side of sugar but stops were elected and we are now looking for a basing action from which to put on long call positions. We continue to feel sugar prices could base here on reports of reduced Brazilian sugar cane production going forward.

Cotton: July cotton closed at 89.73c per pound, down 7 ticks mostly tied to the dollar strength. We continue to favor the long side of cotton tied to Indian export concerns. We would add to long positions on any further price declines with our interim objective of $1.00-$1.10 per pound.

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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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