Broad Soft Market Summary: Mixed week for the softs with coffee and orange juice having big days early in the week. Cotton looks poised to test contract highs while cocoa and sugar are at the low end of their ranges.
Specific Soft Market Summary:
Coffee (DEC) For week: Opened 135 Closed 138.20
Fairly large range in coffee this week, particularly on Monday. We saw a big jump in prices on Monday due to rains and a holiday in Brazil. After pushing close to contract highs early in the week, strength in the dollar coupled with South American selling pushed coffee considerably lower. There is a threat of a hurricane in the Central America, which produces a small fraction of the world's supply. Weather is expected to be good in Brazil which has also put pressure on prices as of late.
Cotton (DEC) For week: Opened 67.49 Closed 66.59
We hit the highs of the week, 69.26 on Monday and drifted lower from there. Cotton has been consolidating between 65 - 70 after breaking the triple top of 65.50. Harvest is 20% less than the same time last year due to the rains a few weeks ago. Traders are still waiting to see the full effect of said rains on quality. There is potential there to push the market above 70. We are buyers in the 66.50 - 66 range with stops below 65.
Sugar (MAR) For week: Opened 22.81 Closed 22.36
Sugar tested 24 on Tuesday and Wednesday, but was unable to push through. As long funds squared off positions, after not making new highs, sugar has come back to the low end of its recent range, 22 to 22.50. We closed at our lowest levels since last week. We see mills buying when the price gets below 22, unless there is a strong reversal in the dollar. India is going to be short about 8 million tones due to the worst drought in recent memory. Sugar finished the week on its lows as crude sold off a couple bucks in the afternoon.
Cocoa (DEC) For week: Opened 3297 Closed 3186
Cocoa grinded lower all week as we saw some strength in the dollar. Cocoa is down over $200 since the contract highs of OCT 23 at 3412. We might see some buying come into the market around 3175, the low end of the recent trendline. We also saw selling due to the fact that strikes were delayed in West Africa. A global production deficit is still expected for 2009. With little fresh news in cocoa, any sort of lack of demand for luxury goods (like Friday's unemployment number) brings in sellers.
Orange Juice (JAN) For week: Opened 110 Closed 116.05
After a big range on Monday, OJ was quiet for most of the week. Orange juice was down on Monday, but up the rest of the week. We put in three and a half week lows on Tuesday. Traders still fear a smaller than expected crop out of Florida. The USDA projections are for 136 million boxes, which is down 16% from a year ago.
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