Markets face snap back after irrationally exuberant jobs move

Grains and Oilseeds:

September corn (CBOT:CU13) closed Friday at $5.26 ¾ per bushel, down 5 1/2c tied to a lack of fresh fundamentals and the strong dollar. With normal temperatures and rains we see no reason to enter this market. Exports remain as expected. Stay out for now. September wheat (CBOT:WU13) closed at $6.59 ¾ per bushel, down 5 1/4c also tied to the dollar with no change in basic fundamentals. Concern that the Egyptian crisis could keep Egypt out of the import market pressured wheat prices as well. Stay out for now. November soybeans (CBOT:SX13) closed at $12.27 ¾ bushel down 23c as export inspections reported in line with expectations. The tight old crop situation could continue to provide support even against the strong dollar. We like the long side of soybeans from here and would buy some calls.

Meats:

August cattle (CME:LCQ13) closed at $1.22075 per pound, up 12.5 points on short-covering and for the week managed a gain of 3.2%, the largest gain since September of 2012. We may have seen the bottom since this action in the face of a strong dollar is, in our opinion, a positive sign. Buy some calls in the deferreds. August hogs (CME:HEQ13) closed at 97.725c per pound, up 87.5 points also on pre holiday weekend short covering even against the strong dollar. Good retail buying also a plus for both cattle and hogs this past week. We prefer the sidelines in hogs however.

Coffee, Cocoa and Sugar:

September coffee (NYBOT:KCU13) closed at $1.2070 per pound, down 70 points mostly against the strong dollar with a quiet cash market. Some roaster buying at the lows kept prices from declining further and some reluctance from Brazilian farmers awaiting higher prices before moving beans. We like the sidelines in coffee. September cocoa (NYBOT:CCU13) closed at $2,200 per tonne, down $30 tied to good harvest weather and movement of beans to ports in western Africa. Dollar strength also a factor. We prefer the sidelines here as well. October sugar (NYBOT:SBV13) closed at 16.24c per pound, down 18 points tied to the strong dollar against the Brazilian Real. Sugar remains on our "no interest" list. Technicians continue to talk about "support levels," which keep getting "adjusted" as selling pressure continues. Stay out for now.

Cotton:

October cotton (NYBOT:CTV13) closed at 86.37c per pound, down 77 points. The lack of any damage from the recent heavy rains in the Delta prompted long liquidation. We prefer the sidelines for now.

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About the Author
John Caiazzo

John has over 40 years experience at major U.S. Brokerage firms as Manager and Director of various International Divisions and is the founder of his own trading and brokerage firms. Over the years John has gained a wealth of knowledge and experience in all aspects of investments and trading. He was also a floor trader at the Commodity Exchange in New York. He formed Acuvest in 1999 and can be reached at futures@acuvest.com.

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