Markets muddle through QE tapering talk

Meats:

October cattle closed Friday at $1.26925, down 1.5c after having traded limit up 3c on Thursday. The feeder cattle market tied to the Tyson ban on cattle using Zilmax feed prompted an immediate shortage of marketings and pushed prices higher. We have been on the sidelines but now would consider purchases of December contract using stop protection. October hogs closed at 85.15c per pound, down 1c after gaining on the switch from beef tied to pricing but we do not see any reason to buy hogs. The "barbecue" season has not seen any increase in demand for pork products. Stay out for now but watch for gains in demand by China, whose recent improvement economics have provided some support based on the purchasing ability.

Coffee, Cocoa and Sugar:

September coffee closed Friday at $1.2240 per pound, up 35 points tied to reports of Brazilian farmers increasing the amount of arabica beans in blends thanks to the premium over the less favorable robusta beans. We could see further price gains and would look to buy the dips using stop protection of course. September cocoa closed Friday at $2,452 per tonne, down $14 after recent gains tied to the dry weather in West Africa especially Ghana and the Ivory Coast. With increased offerings on Ivory Coast beans, we could see some delays at the ports which would reduce availability. We like the long side of cocoa but use stop protection here as well. October sugar closed at 17.01c per pound on Friday, up 19 ticks on technicals after having bounced off recent lows. We could see momentum traders adding to long positions but we prefer the sidelines in sugar even as some assessment of frost damage in Brazil is being assessed. Stay out for now.

Cotton: (NYBOT:CTV13)

October cotton closed Friday at 88.95c per pound, down 43 points after recent sharp gains tied to weather concerns in Oklahoma and Texas that could result in a smaller than expected harvest. The USDA report should give better indications so we would wait until after the report before issuing recommendations or comments. Technically we should see continued price gains.

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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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