February gold (COMEX:GCG14) closed at $1,228, down $3.90 and for the week lost fully 2% to the chagrin of the gold bugs television bullion marketers. The stronger than expect U.S. jobs data as well as the lack of any inflationary concerns prompted the ongoing weakness in precious metals. March silver (COMEX:SIH14) closed at $19.455 per ounce, down 11.5c following gold and long liquidation. Once again for those that "must have" a precious metal in their portfolio, we prefer silver. The "white metals" fared no better as concern of the end of the stimulus buying program by the Fed could prompt particular asset class sales such as hedge commodities. January platinum closed at $1,356.60, down $6.90 per ounce while March palladium lost $3.15 to close at $733.70 per ounce. Platinum and palladium are used in automobile catalytic converters and any decline in production prompted by oversupply of autos could produce still further price declines. We prefer the sidelines
Grains and Oilseeds:
March corn (CBOT:CH14) closed at $4.34 ½ per bushel, up one cent even as China rejected over 120,000 tons of U.S. supplies this week due to genetically modified variety which is disapproved. The Tuesday supply/demand report could provide the needed fundamentals to move this market. We prefer the sidelines. March wheat (CBOT:WH14) closed at $6.50 ¾ per bushel, down 1 1/4c tied to increased global production and declining U.S. exports. We prefer the sidelines here as well. March soybeans closed at $13.10 ¼ per bushel, down 1 1/2c tied to favorable weather reported in Brazil, the world’s largest exporter of beans and an expected record crop. We are on the sidelines here as well. However, in none of the instance above would we consider shorting "food". Any change in the fundamentals could provide for renewed buying interest by traders.
Coffee, Cocoa and Sugar:
March coffee (NYBOT:KCH14) closed at $1.0680, up 80 points on late short-covering after London selling by producers subsided. Reports of some Vietnamese producer selling but Brazilian producers are awaiting slight higher prices before offering supply. Some Central America producers hedged selling against their harvest, which is progressing. Coffee appears to have found support at these levels and for that reason alone we would buy a few contracts with stop just below recent lows. March cocoa (NYBOT:CCH14) closed at $2,800 per tonne, up $46 on shortcovering after recent speculative selling. Adequate current supplies met by strong demand keeping prices in a tight range. We expect additional shortcovering and would buy a few calls for the March contract. If prices break to support levels around $2,700, we would consider adding the call positions. A breach of the $2,650 level would push us out to collect whatever is still available in the way of premiums. March sugar closed at 16.58c per pound and remains on our "no interest" list. Offerings expected by India and Thailand could continue to hold prices down. Stay out.
March cotton (NYBOT:CTH14) closed at 80.32c per pound, up 1.47c tied to reports that some production in China was lost due to the bad weather in the growing areas. That being the case and with China offering some supplies to its domestic market could mean China may have to buy cotton to replenish its supplies. We like cotton from here and would buy but with stop protection.