Markets on alert for changes to Fed QE program

Grains and Oilseeds:

December corn (CBOT:CZ13) closed at $4.27 per bushel, down 1 1/4c against the strong dollar Friday and traded at a three year low. Beneficial rains in Argentina as well as the increased estimate for U.S. harvests for both corn and soybeans prompted new selling. We are on the sidelines in corn and soybeans. December wheat (CBOT:WZ13) closed unchanged at $6.67 ½ per bushel tied to disappointing grain inspections and supplies. We prefer the sidelines in this group.

Meats:

December cattle (CME:LCZ13) closed at $1.3215, down 57.5 points on additional short-covering after recent session strength. The cattle market has benefited from Hedge fund buying and a shortfall in supply. We had liked cattle from the long side but at current prices would take profits and stand aside. December hogs closed at 88.375c per pound, down 80 points on continued profit-taking after trading as high as 92.30c. We remain sidelined in hogs.

Coffee, Cocoa and Sugar:

December coffee (NYBOT:KCZ13) closed at $1.0595 per pound, up 55 points on light short-covering in front of the weekend but remains under heavy selling pressure tied mostly to larger crop expectations forecast for Brazil, the world’s largest grower. Stay out. December cocoa (NYBOT:CCZ13) closed at $2,651 per tonne, down $26 on continued profit-taking after the gains from the June/July lows around $2,100. Reports that Nigeria has good crop production prompted profit-taking. Without reports on quality or yields from Ghana, the market could go either way from here. We are on the sidelines. March sugar (NYBOT:SBH14) closed at 18.23c per pound, down 9 points on profit-taking after recent gains tied to a fire at port warehouses that impacted overall exports from Brazil. However other origins i.e. Thailand and India have made up the differences. We prefer the sidelines here as well.

Cotton:

December cotton (NYBOT:CCZ13) closed at 76.65c per pound, down 53 points against the strong dollar even with better export sales reported by the USDA. Weak demand as harvest progresses and concern that China will not be the usual large buyer as supplies are adequate in the near term. 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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