Markets wait on data after shoppers descend on Black Friday

Energies:

January crude oil closed at $92.72 per barrel, up 42c mostly on shortcovering in the holiday shortened week. The weak dollar as well as a lack of fresh fundamentals mainly responsible for the trading Friday. For the month of November, crude oil lost 3.7% tied to gains in production against declines in overall demand. We remain bearish for crude barring any geopolitical events which could cause changes in the basic supply/demand structure.

Copper:

March copper closed at $3.2080 per pound, up 1.75c tied to the weak dollar but copper depends on a number of elements such as producer problems from South America and demand by major users such as China. Rather than chart copper prices, monitor the basic fundamentals mentioned above.

Precious Metals:

February gold closed at $1,251 per ounce, up $13.20 on shortcovering after the worst monthly performance since the June "collapse." Having sold my one ounce coins at $1,747 I am amused by the TV commercials promoting the "need" to hold gold notwithstanding their "promotion" from the highs. I remind my readers that in 1980 when gold first touched $785 per ounce, it took those "investors" 25 years just to break even. A rather poor rate of return. Could it happen again after having touched $1,900, maybe, but in the meantime there are other investments that have performed better for investors, even the stock market. We prefer the sidelines unless you need to buy a Rolex for your "loved one" for Christmas. March silver gained 34c per ounce to close at $20.02 per ounce. Of the two precious metals that one "must own" I prefer silver. January platinum closed at $1,369.80, up $16.10 per ounce while its "sister metal" palladium closed at $719.65 per ounce, up $3.00 basis the March contract. The "white metals" rely on the "fortunes" of the auto industry as they are used for catalytic converters. We prefer other opportunities for our clients.

Grains and Oilseeds:

March corn closed at $4.25 ¼ per bushel on Friday, down 1 1/4c quiet holiday trading. We will have to wait for fresh fundamentals before further comment. March wheat closed at $6.68 ¾ per bushel, up 5 1/4c tied to the weak dollar and increasing demand by Egypt, the world’s largest purchaser of wheat, and Japan. We could additional buying this coming week as additional demand develops. March soybeans closed at $13.18 ¾ per bushel, up 12 1/2c on light holiday volume, shortcovering and the weak dollar. Soybeans have lost over 5% this year on increased global production expectations. We prefer the sidelines in Soybeans after having been bullish for some time.

Coffee, Cocoa and Sugar:

March coffee (NYBOT:KCH14) closed at $1.1110 per pound, up 3c on shortcovering and new buying and reports that the Coffee Association is asking the government of Vietnam to buy 20% of the harvest in order to support world prices after the sharp decline in prices. Brazil has a large amount of coffee to sell and with no fresh reports from Latin America we do not see any reason to expect the rally to continue. Stay out for now. March cocoa (NYBOT:CCH14) closed at $2,784 per tonne, up $18 tied to the weak U.S. and the ongoing West African harvest. Tight supplies could prompt further buying but we remain on the sidelines in cocoa. March sugar closed at 17.2c per pound, down 2 ticks and remains on our "no interest" list. Funds the main sellers of late. Stay out for now.

Cotton:

March cotton (NYBOT:CTH14) closed at 78.65c per pound, up 11 points tied to concerns of crop quality tied to snows in Texas could impact yields. Expectation of Chinese government offers of its supplies could offset those concerns but we look for continued price gains and would buy cotton at current levels using stop protection.

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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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