Banking on the better than expected jobs number may be a mistake

Precious Metals: April gold(COMEX:GCJ14) closed at $1,339.10, down $12.70 or 0.9% after the U.S. employment data was stronger than expected giving rise to thoughts of an "improved" U.S. economy. We disagree but remain on the sidelines in gold. May silver(COMEX:SIK14) closed at $20.93 per ounce, down 65¢ or 3% after climbing 1.4% the previous session. Of the two metals we continue to prefer silver for those that must have a precious metal in their portfolio. April platinum closed at $1,483.60 per ounce, down $3.20 or 0.2% but for the week gained 2.5%. March palladium closed at $781.80 per ounce, up 65¢ or 0.1% and for the week gained 5% outpacing its sister metal as we had suggested would occur. We continue to favor palladium over platinum. Russia is one of the largest producers of platinum and palladium and supplies could be impacted by the current stalemate over Ukraine. We prefer the sidelines with the exception of our two choices, silver over gold, and palladium over platinum.

Copper: May copper(NYMEX:HGK14) closed at $3.0820, down 13.6¢ or 4.2% and for the week lost 3.3%. A lack of fresh fundamentals and overall concern over industrial demand by the U.S. auto and housing industry and China prompting the long liquidation. We remain bearish for copper.

Grains and Oilseeds: May corn(CBOT:CK14) closed at $4.87 ¼ per bushel down 3.75¢ after trading as high as $5.02 ½ intraday. The dry weather that prompted the rally in corn from its December lows around $4.15 per bushel met some profit taking in front of the weekend as concern over Ukraine persists. We prefer the sidelines from here. May wheat(CBOT:WK14) closed at $6.53 ½ per bushel, up 7.5¢ tied to Ukraine concerns. Ukraine is a major exporter of Wheat coming in third and any disruptions could prompt further short term price gains. We prefer the sidelines for now. May soybeans(CBOT:SK14) closed at $14.59, up another 21¢ on continued dryness in Brazil and reduced South American soybean production estimates by both Informa and Oil World. Other areas of concern were the South East Asia palm oil output and a downgraded forecast for Argentina’s forthcoming soybean crop. We remain bullish for soybeans.

Coffee, Cocoa and Sugar: May coffee(NYBOT:KCK14) closed at $1.9660 per pound, up 1.05¢ on continued concern over Brazilian production and dryness. Another factor pushing prices higher is the recent information from Colombia where traders are reneging on contracts to hold out for higher prices. We could see further price gains but we prefer the sidelines. May cocoa(NYBOT:CCK14) closed at $2,981 per tonne, up $20 on concerns over the aging Indonesian plantations and black pod disease in Cameroon. A forecast by the International cocoa Organization of reduced production and increased consumption also a fact in the recent strength. We could see, as I mentioned last week, price gains into the $3,000-$3,015 area before meeting technical resistance. Another factor is Ivory Coast supply increase by 7% and the Nigerian expectation for a smaller crop offsetting each other. We moved to the sidelines in cocoa. May sugar(NYBOT:SBK14) closed at 17.94¢ per pound down 38 points on profit taking after the recent gains from the 14.95¢ level. Extremely dry weather in Brazil could result in a sharp reduction in the 2014-2015 crop. We could see further price gains but formidable technical resistance exists between 19.5¢ and 20¢. Any breach of that resistance could result in prices into the 23-25¢ area. We like sugar from here but using stop protection.

Cotton: May cotton(NYBOT:CTK14) closed at 90.86¢ per pound, down 75 points on profit taking after its sharp price gains from the November 2013 lows around 77.5¢. The weak dollar a factor as well as improved demand could move prices still higher. We like cotton but use 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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