Grains and Oilseeds: December corn closed at $7.99 ¾ per bushel, down 8 3/4c on profittaking in front of the holiday weekend. The drought conditions across the country have caused heavy buying across the board in grains and soybeans and concern persists related to supplies going forward. We prefer the sidelines in corn. December wheat closed at $8.89 ½ per bushel, down 13 1/2c on profittaking as with corn but with the added negative that Russia does not plan any export restrictions allowing Russian wheat to compete more favorably against U.S. exports. We prefer the sidelines in wheat as well. November soybeans closed at $17.56 ½ per bushel, down 7c on profittaking in front of the U.S. holiday weekend and on trader "taking profits off the table" after prices gained to record highs. We continue like soybeans but as we suggested recently, take some profits, wait for the pullback, then add to call positions.
Meats: December cattle closed at $1.2865 per pound, up 2c as beef processors pay higher prices in front of the holiday shortened weekend. Better than expected demand could push prices higher and we like the long side of cattle from here. The previous concerns related to animals pushed to market and creating supply due to higher feed prices may have abated. The period for rebuilding those herds prompting some shortcovering and new buying in futures. December hogs closed at 72.4c per pound, up the 6c limit on heavy shortcovering in front of the holiday weekend as selling due to higher feed prices and increased slaughter may have been overdone for now. We like hogs from here but use stops.
Coffee, Cocoa and Sugar: December coffee closed at $1.6475 per pound, up 1.35c on shortcovering and technical buying after trading as low as $1.6250 during the session. With a three day holiday traders squared their books since the Monday holiday is limited to U.S. trading and Europe will be open. With Columbia expecting an improving harvest we could see additional hedging pressure and would avoid coffee for now. Our longer term view however is positive. December cocoa closed at $2,610 per tonne, up $9.00 on supply concerns from West Africa, the world’s top producing region. We could see further price gains on continued speculator buying tied to lower output expectations from Ivory Coast. October sugar closed at 19.78c per pound on light shortcovering in front of the three day U.S. holiday and on suggested oversold technical condition. We prefer the sidelines.
Cotton: December cotton closed at 77.26c per pound, up 32 points on pre-holiday shortcovering. The USDA report of low U.S. cotton exports and a lack of fresh fundamentals puts us on the sidelines but after recent lows, with a bullish bias going forward.