Following each market review is a weekly buy or sell number. Pay close attention to them. These numbers have been useful to me for over 30 years! They are pivotal in nature. Use them as a tool to ascertain the direction of the market. Do not confuse these numbers with the common pivots you’ve heard of or use in your market analysis. That’s not at all what they are. Feel free to contact me if you wish to discuss this further. If you are positioned in March futures I recommend you roll your position to May. Not only do longs face the possibility of delivery, trading in March contacts will soon become very thin due to diminishing open interest and volume.
Coffee 02/19/2010
Life Time Trading Range 41.50 Cents - $337.50 per Pound
Trades on The ICE 2:30 AM – 1 PM CDT
Presently, there is quite a mix of bullish and bearish fundamentals affecting Coffee prices; most bullish in nature. A resurgence of commercial buying interest followed Coffee’s recent break in price. There is an ongoing decline in exchange certified stocks, and El Nino has once again presented weather problems for growers in Columbia. Hot dry weather is also of major concern. Strong price premiums are being charged to buyers of Central American Coffees. I’ve heard that transactions as much as 70 cents above the March futures are taking place. In the past, situations like this have pulled futures prices higher. Though generally a situation we relate to futures markets, this could be construed as a type of backwardation as the cash market price is higher than the futures price. With futures trading far below cash, there is even more room for Coffee to slingshot to the upside. If strong demand continues, futures should eventually enter backwardation as well. These fundamental facts are all supportive to Coffee prices.
The decrease in open interest during the recent up move indicates that it was fueled by short covering. This does not bode well for the market short term. Short covering removes underlying support (would be buyers) from the marketplace. Debt problems in Greece and the Euro-Zone continue to suppress demand.
First notice day was Thursday for March ICE Coffee. Longs can receive delivery starting that day. If you have open positions in Coffee, long or short, and intend to stay with them, roll them into May futures. It is not wise to speculate in a market that has entered its expiration cycle.
The Coffee markets fundamentals are bullish. I recommend buying futures or call spreads on weakness.
March Coffee must close above 136.30 Friday to turn the weekly trend up.
Do not trade without protective strategies such as stops and or options.
To open an account with Robin E-Mail rrosenberg@pfgbest.com or telephone 800.611.6974.
You can open an account online in a matter of minutes, or if you prefer a paper account form we will send one your way. Direct to floor order execution where possible. Options a specialty.
Cocoa 02/19/2010
Life Time Trading Range $444 – $5379 per Tonne
Trades on The ICE 3 AM – 1 PM CDT
This could be an interesting week for Cocoa. The president of the Ivory Coast will be appointing a new government. Civil unrest could be just around the corner If the populace does not accept his appointees. This would serve to boost Cocoa prices. But because the majority of the main crop has been harvested, the effect of this would more than likely be short lived. The 2009-10 main crop harvest is 10 percent further along than the 2007-08 crop was at this time last year. Mild Harmattan winds and wet weather have assisted greatly in the development of the mid crop.
It appears that supply tightness will begin to lessen soon. There is still much concern regarding sovereign debt problems in Europe. This is creating downside pressure on the Euro. Being a large consumer of chocolate, Europeans will shy away from purchasing luxury items until a more positive macroeconomic situation takes hold.
Cocoa had an excellent upside move off of the lows of two weeks ago. The market pushed through the 38.2% Fibonacci retracement stopping just short of the 9 bar moving average. In my opinion, a close this week above the 38.2 retracement (31.57 in the March contract) would be bullish. On the flipside, a close this week below 30.87 in March Cocoa could see a test of the 29.04 weekly sell number.
I am presently neutral on the Cocoa market. I will take to the sidelines and watch for opportunities to develop.
March Cocoa must close below 29.04 Friday to turn the weekly trend down.
Do not trade without protective strategies such as stops and or options.
To open an account with Robin E-Mail rrosenberg@pfgbest.com or telephone 800.611.6974.
You can open an account online in a matter of minutes, or if you prefer a paper account form we will send one your way. Direct to floor order execution where possible. Options a specialty.
Cotton 02/19/2010
Life Time Trading Range $26.84 – $117.20 per Pound
Trades on The ICE 8 PM – 1:30 PM CDT (Next Day)
This Cotton market has some very strong legs. It has run up more than ten cents a pound over a two week period. Cotton is digesting the economic news of late and has taken a liking to it. Housing starts came in positive as did industrial production. Permits for new construction were not as robust as expected. Initial jobless claims came in higher than expected as did continuing claims. Producer prices and core producer prices came in better than expected. One would think that job growth would be looked at as an important facet in Cotton pricing but the market just shrugged it off as if it knew something we didn’t. Perhaps it does, being the leading indicator that it is.
This is a quiet time for Cotton growers as harvest is over and their focus has shifted to planting intentions for the 2010-11 crop. Cotton prices want to move higher and planters should use extreme caution when calculating their planting intentions. Too many plants + good weather = an extremely large supply. Don’t kill the bull!
Exports, Exports, Exports! About ten days ago, the U.S.D.A. reported a one million bale increase in the U.S. Cotton export projection for 2009-10. I’ve heard that this number may very well be revised upwards again. This is bullish for Cotton.
On Thursday, Cotton made new contract highs and looks to be headed even higher. I see at least four more cents to the upside. Do not chase this market. It will slap your account hard if your timing is off.
I recommend buying Cotton futures or call spreads on weakness.
March Cotton must close below 71.85 Friday to turn the weekly trend down.
Do not trade without protective strategies such as stops and or options.
To open an account with Robin E-Mail rrosenberg@pfgbest.com or telephone 800.611.6974.
You can open an account online in a matter of minutes, or if you prefer a paper account form we will send one your way. Direct to floor order execution where possible. Options a specialty.
Sugar 02/19/2010
Life Time Trading Range 2.30 Cents – 66.00 Cents per Pound
Trades on The ICE 2:30 AM – 1 PM CDT
It’s not looking too peachy dandy for Sugar bulls at this time. The Brazilian crop that was not harvested last season will soon be processed. Even though this Sugar is more than likely sold, talk is that it is pressuring Sugar prices. Importers, mainly Indonesia and India, may temporarily curtail Sugar purchasing, as they await lower prices in hopes of better domestic production in the future. Pakistan however has raised its tender of 50,000 tonnes to 200,000. This tender will be watched very closely. Brazil will again funnel more Sugar to edible Sugar refiners than to ethanol production. I’m not sure how long this can go on as ethanol prices spiked higher recently, and Brazil is importing gasoline for the first time in decades. If high ethanol prices persist, they will be forced to use more sugar to manufacture it. This will diminish the supply of edible Sugar.
I have just three things to say, “the market is the market, is the market!” And the market always goes where it wants to go and it’s never wrong. Even though global Sugar supplies remain tight, this market is looking quite weak.
A look at the May Sugar daily chart shows a down flag projecting to the 23 cent area. The stochastic study has given a sell signal and the R.S.I. is below 50. The weekly continuation chart is exhibiting a bearish picture, and the weekly MACD is .01 above the 0 line. Looking like someone about to jump off a cliff.
I use R.S.I. quite differently than most other technicians. If you would like an explanation just give me a call.
March Sugar must close above 27.44 Friday to turn the weekly trend up.
Do not trade without protective strategies such as stops and or options. To open an account with Robin E-Mail rrosenberg@pfgbest.com or telephone 800.611.6974.
You can open an account online in a matter of minutes, or if you prefer a paper account form we will send one your way. Direct to floor order execution where possible. Options a specialty.
