Meats: August cattle closed at $1.22190 per pound, down 20 points even against the weak dollar but with expectations of a decline U.S. cow numbers we may be near an interim bottom. I like long calls from here. August hogs closed at 96.55c per pound, down 7.5 points staying near the center of the recent range. We prefer the sidelines as the expected demand from the summer “barbecue” season is not providing the demand expected.
Coffee, Cocoa and Sugar: September coffee closed at $1.2275 per pound on Friday, down 4.8c on long liquidation after recent gains. Prices had risen to $1.34 per pound Thursday tied to reports that temperatures in Brazil could drop to near freezing in its coffee growing states. Brazil produces over 30% of the world’s coffee and in the past freezes have affected global supplies and prompted buying. We could see further gains but that would depend on the weather. For now I prefer the sidelines. September cocoa closed Friday at $2,353 per tonne, up $6.00 after Thursday when the North American cocoa processing in the second quarter of the year showed a 12% gain. Reports that Ivory Coast had sold 750,000 tonnes of 2013-14 forward cocoa which was more than expected by the market prompted shortcovering and new buying. We could see further price gains so we would consider a few calls from here. October sugar closed at 16.28c per pound on Friday, up 10 ticks on light shortcovering on reports that output from Brazil might have been hurt by wet, cold weather. We are off the sidelines in sugar and would put on a few calls from here.
Cotton: October cotton closed Friday at 86.26c per pound, up 1.27c on shortcovering after the sharp selloff on Thursday of over 2%. A reduction of imports by China is a major concern as well as a forecast for higher world production. We prefer the sidelines in cotton.