Softs - Sep 28,2009
Sunday, September 27, 2009
by PitGuru.com Authors of PitGuru.com
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The Softs Pit Review
For the week of September 28th, 2009
By Guest Analyst James Mound of MoundReport.com
Coffee held a triple trend line resistance and could see some selling pressure short term from an anticipated strengthening of the U.S. dollar against the Brazilian Real and Vietnamese Dong. The bottom line for coffee long term is a static supply environment with expanding demand, susceptibility to supply squeezes and crop issues, and the 2nd-largest producer (Vietnam) eventually running into production quality problems that could send coffee to historically high levels. Debit calendar spreads are recommended to play the two forecasts.
Cocoa has seen its day in the sun and it is ready to come crumbling down. Cocoa has seen levels really only once before and the fundamentals a year ago appear far more drastic and bullish than they do now. Most may know conditions in the Ivory Coast are showing exposure to black pod disease and general crop degradation but politics there are almost predictably bad and global demand for cocoa is not quite the panicked buying environment many expected a year ago. This market is playable to the downside with straight puts.
Sugar remains exposed to a U.S. shortage and the market is in a butting-heads environment with producers coming in and selling the market while specs and funds buy into the hype. The congestion is overdone and a breakout is pending. Long strangles are recommended. OJ is a buy on dips as the market enters a second wave bull production cycle. A decent spend by the Florida Growers and Tropicana may bring life back into the demand side of orange juice, while U.S. production remains large enough and exposed to a two season weather concern (hurricanes and frost). Cotton continues to be a buy on dips as global subsidy programs support a market that had a short term recession demand dip and big cycle supply shift. That means the wow factor on the upside could be massive when demand comes back and they realize the supply evaporated.
Past performance is not indicative of future results.
***chart courtesy Gecko Software
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About the author
Daniel Cronin - PitGuru.com's Energies & Metals Guru Daniel Cronin has spent years on the floor of the Nymex as part of one of the largest energy floor brokerages in the business. His extensive experience stems from not only his Pit background but also through intense studying and implementation of complex technical analysis and market trading techniques via the mentorship of the now retired Ralph Acampora. Mr. Cronin brings subscribers a rare combination of book smarts and real world trading experience in one of the most volatile market sectors in the futures industry. Matthew Pierce - PitGuru.com's Grains Guru Mr. Pierce is a unique acquisition for Futures Press Inc. in that he has an unmatched level of real hands-on experience within the industry in addition to his floor trading expertise and top notch education at the University of Illinois College of Agriculture. Matthew has literally cultivated the perfect professional career as a grain expert by working with the industry's most recognizable companies such as Cargill, LaSalle Group, Conagra, Walsh Trading Inc. and many more. In addition to trading on the floor of the Chicago Board of Trade, Mr. Pierce writes what many in the business believe to be the best kept secret amongst trading reports available in the industry. Jurgens H. Bauer - PitGuru.com's Softs Guru Jurgens owns and operates his own order execution firm on the ICE trading floor. He has been a member since 1987. His firm, Jurgens Bauer and Associates, specializes in executing option orders for a wide array of customers and a variety of industry participants, including individual speculators, funds and members of the trade. While Jurgens has been an active member of the trading community he has also spent time since 2000 working at raising awareness of environmental commodities, educating industry professionals on emissions trading, brokering transactions between private counter parties and developing SO2 and NOx contracts for the NYMEX. Frank LaMantia - PitGuru.com's Financial Guru Soon to be Dr. LaMantia, Frank is not only one of the most educated traders on Wall Street, but also maintains an industry resume of substance and depth. Frank has worked extensively on an Institutional preferred stock syndicate desk, as a government bond specialist, and as a financial advisor all the while achieving multiple licenses in the finance field. With an extensive and impressive client list (including Citibank, Bear Stearns, Lehman Brothers, AG Edwards, Mesirow, UBS, and numerous Hedge Funds), Mr. LaMantia brings his one-of-a-kind background to his current occupation of full time trader.
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