Stocks, commodities follow expectations for Fed

Quantitative easing drives the boat

Grains and Oilseeds: December corn closed at $7.98 per bushel, down 1/2c and having difficulty holding the $8.00 level. The recent strong rally from June lows tied to weather was a factor in the rallies for this group but new information needed for further price action. Stay out of corn. December wheat closed at $9.06 ¼ per bushel, up 13 1/2c on hopes for greater export demand and continued dryness in the Great Plains. November soybeans closed at $17.33 per bushel, down 14c on profittaking after recent strength but remains our favorite in the group. A factor in the selling also due to possible yield improvement due to rains. We continue to favor soybeans but would not add to current positions at this time pending further information from the growing areas.

Meats: December cattle closed at $1.2910, down 10 points on slight profittaking after recent strength. Beef production was reported as down 23% over a year ago and weekly slaughter down 2.6% to down 3.3% from last year. We continue to favor cattle but technically resistance is around $1.33. The June and July lows were a direct result of herd reduction tied to high feed prices. The reality of time necessary to restock herds could lead to higher prices for December and February contracts. Hold call positions for now and add on any declines. December hogs closed at 70.65c per pound down 2.5c on profittaking after the recent runup to the 73c level which was mostly shortcovering after the June 82c level. We could see further price gains on a short term basis.

Coffee, Cocoa and Sugar: December coffee closed at $1.6370 per pound, up 5.5c on shortcovering and against the dollar weakness but for the week lost 1%. With ICE certified stocks up by 11,749 bags to 1,994,417 on September 6 the highest since August of 2010, we could see renewed selling interest in coffee if it returns to the $1.70 level. Hold long positions but don’t add for now. Any change in the dollar could prompt sharp price action. Raise stops. December cocoa closed at $2,677 per tonne, down $14 but for the week gained 2.5%. Concern that management reform by top grower Ivory Coast could cause "chaotic" activity in its exports but beneficial rains resulting in higher output next season could offset any export problems.The market has gained from the June $2,100 lows and we could expect, given any improvement in exports and production, a sharp price decline. Stay out for now. October sugar closed at 19.39c per pound, up 52 points or 2.7% after Thursdays two year low of 18.81c. The weak U.S. dollar a major factor along with the Brazilian holiday and mills not selling into the rally to any great degree. An increase in supply tied to better weather could result in another wave of selling but at these prices we would consider light long positions for a move to the 21c level.

Cotton: December cotton closed at 76.35c per pound, up 36 points tied to the weak U.S. dollar and China support for farmers. We like cotton from here. Support at the June 64c lows and the continued price rise could continue to the 80-82c level.

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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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