Broad Soft Market Summary: As the dollar strengthened this week, it certainly brought sellers into the soft markets. We were modestly lower across the board. Cocoa, cotton and OJ are still near highs while coffee has sold off quite a bit.
Specific Soft Market Summary:
Coffee (DEC) For week: Opened 136.75 Closed 135.45
Coffee was generally down everyday, albeit modestly. Coffee looks to be trading near the bottom of its up-ward trendline from early September and early October. The stronger dollar outweighed the impact of better than expected GDP numbers. BNP Paribas expects production to beat consumption by about 14 million bags. Any break below 132 would signal a bear trend. Currently we are at two week lows.
Cotton (DEC) For week: Opened 67.68 Closed 67.61
Cotton consolidated most of the week between 66 -69. Cotton is still trading above old resistance/new support of 65.50 and near contract highs. The stronger dollar has put a cap on prices, for now. Cotton last traded above 70 back in August 2008. The most recent USDA data showed 19% of crop is harvested versus a 43% average. The rains in the Delta were the worst since 1913. There are some analysts that say we could see a 20 year low in output.
Sugar (MAR) For week: Opened 23.18 Closed 22.78
Sugar drifted lower most of the week. Currently we are trading at our lowest levels since early October. There is some support at the 21.50 level and any break below that would signal a new downtrend. There is news out of India that their crop may be better than expected. Also, India is nationalizing the price of sugar, which is bringing product to market. Without any fresh rains in Brazil or supply concerns from India, sugar will have a hard time trading above 25 (without the DIX breaking 73.)
Cocoa (DEC) For week: Opened 3370 Closed 3297
After closing at contract highs last Friday, cocoa was lower almost all week. Most of the correction in cocoa can be attributed to a stronger dollar. Higher prices coupled with a drop in consumer confidence have impacted demand, to the downside. One supportive factor are worries out of the Ivory Coast that production will be lower, after an already step decline of 14% last year. Any break above 3410 would signal a new bullish trend.
Orange Juice (NOV) For week: Opened 110 Closed 111.50
Orange juice was modestly higher, albeit not much. OJ had about a 5 cent range this week. There is still the gap from the weekend of the 10 and 11 of October. We are trading near contract highs currently. Orange juice sales are higher YOY. In contrast, FCOJ movement shows demand has been slowing recently. Traders are starting to roll from NOV to JAN.
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