Grains and Oilseeds: December corn closed at $7.40 ¼ per bushel, down 10 3/4c tied to the strong dollar, Prices remain in a tight range awaiting additional fundamentals. We prefer the sidelines for now. December wheat closed at $8.66 ½ per bushel, down 2c after trding as low as $8.58 ¾ during the session. The strong dollar as well as weak export demand also a factor. Once again, we defer any commitment until after the elections. November soybeans closed at $15.26 ¼ per bushel, down 32 1/4c tied to the strong dollar but also an Informa Economics increase in its estimate for the U.S. soybean crop somewhat less than analyst expectations but still provided for selling pressure in front of the weekend. We had favored the long side of soybeans for some time as the slight rally from the $14.85 per bushel level was disappointing. We like the long side now of the March contract but use stop protection.
Meats: December cattle closed at $1.2530 per pound, down 25 points against the strong dollar but also tied to lower beef pricing. Delivery interruptions tied to hurricane Sandy could push retail prices higher on a short-term basis. Prices remain in the middle of the recent $1.31-$1.28 range and could go either way. December hogs closed at .7785c per pound down 25 points tied to the dollar and weak demand. We prefer taking some profits on the recent rally but would hold a basic long call position
Coffee, Cocoa and Sugar: December coffee closed at $1.5450 per pound, up 1.05c on shortcovering after recent heavy long liqiudation touching its lowest prices in over four months. We could see additional shortcovering tied to some water damage to the ICE warehouses in New Jersey from Hurricane Sandy but probably not enough to offset surpluses. December cocoa closed at $2,444 per tonne, up $24 but below September highs around $2700. Weak demand expected tied to poor economic conditions in European countries and a small increase in world production could add to surpluses. We prefer the sidelines but with a bullish posture. March sugar closed at 19.41c per pound, up 3 little ticks on light pre-weekend shortcovering after recent heavy long liquidation. Based only on the possibility of an oversold condition, we would put on a few calls in sugar. Extreme market action usually prompts a correction and that is basically all we would be looking for.
Cotton: December cotton closed at 70.30c per pound, up 9 ticks from a three month low based on signs of an improving demand. However with China’s inventories expected to increase to 9 million metric tons this season, we could see additional selling pressure from here. Recent highs around 79c were immediately met with long liquidation and new short positions. Any buying at these lows would necessarily be accompanied by stop protection.