Coffee, Cocoa and Sugar:
December coffee (NYBOT:KCZ13) closed Friday at $1.1415 per pound, down another 1.2c in quiet uneventful trading. Rains in Brazil not having material impact on crop development which remains good in most production areas of Latin America and Central America. We remain sidelined in coffee. December cocoa (NYBOT:CCZ13) closed Friday at $2,625 per tonne, up $4.00 after recent profit-taking. Technicals remain bullish tied to reduced production against demand expectations. We could see further price gains on short-covering but we are on the sidelines in cocoa. March sugar (NYBOT:SBH14) closed at 18.53c per pound, up 1 little tick tied to speculative buying on expectations of lower Brazilian production. The recent 2 cent rally from the lows was short-covering but we see some pressure coming from increased production from Thailand with Brazil and India stable. We prefer the sidelines.
December cattle (CME:LCZ13) closed at $1.3240 per pound on Friday, up 62.5 points tied to concerns over shortages of U.S. supplies. We could see further gains but any purchases should be with stop protection. December hogs closed at 87.875c per pound up 1.10c and new contract highs on concerns that an expected report will show a drop in slaughter rates tied to disease losses. We could see further gains but purchase should be through call option market.
December cotton (NYBOT:CTZ13) closed at 86.94c per pound down 50 points after the recent rally tied to concerns that Tropical Storm Karen might more into Georgia and cause production problems. Concern also about typhoon warnings in China also problematic. The recent "collapse" of over 10c per pound prompted the corrective short-covering rally to current prices but not convincing for us. We are on the sidelines for cotton.