Slowdown in jobs looming over stocks, commodities

Job recoveries vs. job creation

Grains and Oilseeds: July corn closed at $6.20 ¼ per bushel, up 5 3/4c tied to reported export sales to Mexico and South Korea. We prefer the sidelines in corn. July wheat closed at $6.09 ½, per bushel, down 6c on higher than expected Kansas Wheat Tour production estimate. The strong dollar Friday also a factor. We prefer the sidelines in wheat. July soybeans closed at $14.78 ¼ per bushel, up 4 3/4c after recent selling took prices through our expected stop protection and now looks like the bull market correction may have been completed. We favor the long side of soybeans from here.

Meats: June cattle closed at $1.15375 per pound, down 50 points after Thursdays gains and due to the weaker than expected U.S. jobs data. Unemployed consumers buy less beef I guess or such is the psychology. We continue to favor the long side of cattle but with stop protection due to the increase in the daily cattle slaughter from a week ago. July hogs closed at 85.36c per pound by weakness in outside markets and lower cash prices and slowing demand. We favor the sidelines in hogs.

Coffee, Cocoa and Sugar: July coffee closed at $1.7485 per pound, down 95 points on light physical trade and its lowest price in 19 months. Since touching $2.4360 on January 12th the price has slipped consistently down to the current lows. We had favored buying coffee with stop but obviously those stops kept getting touched off. Hold on to any calls but do not add for now. July cocoa closed at $2282 per tonne, down $25 on dollar strength and on the Great Britain announced return to recession and the U.S. jobs data. We continue to favor the long side of cocoa but with stop protection. We look for global demand to gain in coming months. July sugar closed at 20.85c per pound, up 20 points on expectations that the European Union plans to import sugar and on concern that rains my disrupt supplies in Brazil. We continue to favor the long side of sugar but once again, as with other recommendation, use stop protection due to the recent volatility in commodities in general.

Cotton: July cotton closed at 87.99c per pound, down 1.22c on dollar strength, projected increase in output from the U.S. However, declines in production from China, and India, and reduced sowings in favor of other more profitable commodities could prompt support for cotton prices. We continue to favor the long side of cotton but with stop protection. We look for a return to the 95c-$1.00 level basis the July. Longer term investors should consider the October or December contracts or calls.

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About the Author
John L. Caiazzo



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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