Markets rally on strong expectations for euro, U.S. stimulus

Trading on promises...

Grains and Oilseeds: September corn closed at $7.98 ½ per bushel up 17 1/4c even with no fresh news to report. The ongoing drought has disappointed crop forecasters and while prices may have over extended the past weeks the recent correction may have provided a new buying opportunity. Even some moisture may not be able to save a large portion of the crop so prices could remain high and advance further. September wheat closed at $8.98 per bushel, down from the session high of $9.11 on pre weekend profittaking. As I have been indicating in prior commentaries, do not be short anything that grows. Russian wheat production estimates continue to decline and with the U.S. grain belt drought, global crop concerns remain. November soybeans closed at $16.01 ¾ per bushel, up another 34 1/4c and remains our favorite in the group. We had been recommending soybeans from the $8.00 level but last week suggested taking profits "off the table". A correction was in order and profittaking took prices down from nearly $17 per bushel but the damage to crops remains a consistent factor. We await Mondays crop report before taking any further action.

Meats: August cattle closed at $1.1980 per pound, up 1.425c on reduced U.S. beef supplies but remains rangebound between $115 and $1.21. The market has been effected by high feed prices as farmers pushed cattle to market increasing supply. However, the restoration of herd sizes takes time and that could prompt shortages in the future. We like the sidelines for now. August hogs closed at 95.2c per pound down 60 points on profittaking after recent gains tied to better cash values. We continue to favor the sidelines in hogs however.

Coffee, Cocoa and Sugar: September coffee closed at $1.7410 per pound, up 5 ticks on Friday tied mostly to the dollar weakness. Profittaking from the recent high around $1.90 level along with pressure from improved weather in Brazil even though rains had disrupted harvesting recently. We prefer the sidelines at current levels. September cocoa closed at $2332.00 per tonne, up $16 tied to the weak dollar but moreso on declining supplies from the worlds largest cocoa producer, Ivory Coast. We could see further price gains to the $2,500 level. We like cocoa from here but use stop protection. October sugar closed at 22.52c per pound, up 2 little points on shortcovering after prices sold off sharply on Thursday from the 24c level. Prices failed to break through the 24c resistance level and traders decided to take profits. We could see another attempt to run through the 24c level but use stops on any buying.

Cotton: December cotton closed at 71.45c per pound, up 6 points but remain mired in a tight range around current levels. Some concern tied to India exports keeping prices at these levels. The global economic situation also a factor in the lacklustre performance for cotton. Stay out for now.

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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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