Broad Soft Market Summary: Tough week for the softs, with most of the complex down for the week. Cotton did briefly make a contract high, but it is looking more and more like a head fake. Sugar and OJ were basically unchanged while cocoa and coffee are at their lowest levels in weeks.
Specific Soft Market Summary:
Coffee (DEC) For week: Opened 139.50 Closed 131.50
Coffee had a tough week, losing over 5% of its value this week alone. Coffee was down almost everyday this week. We saw a big sell-off on Wednesday as the dollar strengthened. We are trading at the lowest levels in 5 weeks. The chart for coffee looks more like an EKG than anything trending. There was little to no fresh news this week.
Cotton (DEC) For week: Opened 66.89 Closed 66.99
On Wednesday (Veteran's Day) we saw a classic head fake (or turtle soup) trade. Tuesday's overnight trade saw the dollar break below 75 and cotton break above 69.50, only to have that reverse once the day session opened. Since the ‘breakout' on Wednesday, cotton has been pushed down to the low end of its recent range, at the 66 level. Cotton is up over 40% YTD. The chart shows a classic key reversal on Wednesday with a new contract high but a close below the previous day's low. Also, we had the USDA come out and estimate that another 200k bales of cotton were lost due to the rains in the Delta and Southeastern US. Range is still 66 - 69.50.
Sugar (MAR) For week: Opened 22.73 Closed 22.65
Sugar was basically unchanged for the week. We did briefly trade as low as 21.78 on Tuesday, which brought in buying from millers. We are currently trading in the low end of the recent range of 22 - 24. We have been in this area for the better part of November. Unica (Brazilian Sugar Industry Association) reported almost a third of a million metric tone drop in production due to the rains in October. Sugar is up about 90% YTD. Without fresh news, sugar would be hard pressed to trade above 25. Technically, if you look at sugar since the contract highs of 26.28 put in on 9/1, we have seen lower highs on price spikes, forming a bear pennant flag. We would be worried if sugar is able to violate 21.50 in any measurable manner and would see it as a new downtrend.
Cocoa (DEC) For week: Opened 3215 Closed 3069
Ever since cocoa hit a contract high of 3405 on 10/26, futures have been in a downtrend. Cocoa has been making lower lows and lower highs. We are currently trading at 5 week lows. Harvest has begun in West Africa. Supplies have been strong out of the Ivory Coast which brings product to market. YTD, cocoa is still up about 20%. Strength in the dollar has weighed on all commodities, and cocoa wasn't immune. We also saw some violation on technical levels to the downside.
Orange Juice (JAN) For week: Opened 116.50 Closed 115.35
Orange juice futures had about a five cent range this week. Technically speaking, a test of contract highs at 122 seems probable. Most likely we need to see the threat of frost come into the market to see a test of highs. OJ did touch a two week high this week. And as usual, light volume.
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