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Softs - Mar 15,2010
Sunday, March 14, 2010
by PitGuru.com Authors of PitGuru.com
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The Softs Pit Review For the week of March 15th, 2010 By PitGuru Jurgens H. Bauer Effective this morning, Monday, March 15, 2010 and through and including trade date Friday, March 26, 2010, ICE is implementing a temporary change to the opening time for electronic trading of Sugar, Coffee and Cocoa. Sugar, and Coffee Contracts will open for trading at 4:30 am NY time (8:30 am GMT) and Cocoa contracts will open at 5:00 am NY time (9:00 am GMT) instead of the usual 3:30 am NY time (8:30 am GMT) and 4:00 am NY time (9:00 am GMT), respectively. There will also be a temporary change to the daily settlement window for the Cocoa Contracts, from 12:48 to 12:50 pm NY time; at the end of this period, the window will revert back to the normal 11:48 to 11:50am time. This temporary change to the opening time for these products is due to the start of Daylight Savings Time in the U.S. on March 14, and will last through the start of British Summertime on March 28.1 With the US $ Index moving below 8000 last week and closing on its low, most of the Soft complex prices firmed on Friday - the exception being coffee. Coffee prices didn't respond as did the others among the softs likely due in part to the April option series expiring - although admittedly there is a part of me that feels the price action could also be a shakeout prior to a better move up. Coffee prices have a history of "shaking the trees" before making a major move, thus making it difficult for weak handed players to participate which is frustrating (and perhaps annoying) to some. Look to see if coffee prices stage a move above 136 basis May futures. Such a move might gain legs and momentum sufficient to bust a move. Otherwise, watch and see if 128.50 is seen. Sugar values had dropped a staggering (or should I say sobering) 11% which is huge. The lows, made Wednesday (and tested both Thursday and Friday), have provided support and may still do so. The other big feature is that option volatility hasn't dropped off. Obviously being a function of how predictable a market's price action is, option volatility might tend to lessen as prices head straight down, but that's just it - they bounced around each day in wide ranges and in unpredictable fashion. I look for Sugar prices to try and mellow out and option volatility to ease as prices bounce. Cocoa… Don't know much that could have caused the strength up from the lows other than the currency play. I think this market a valuable candidate for owning cheap puts as I feel there is a potential for a vigorous move down. Cotton ought to find trade support between 77 and 78 cents, but I cannot see any reason for prices to escalate here.
1 https://www.theice.com/publicdocs/futures_us/exchange_notices/exnot03XX10DST.pdf 
***chart courtesy Gecko Software’s Track n’ Trade Pro Past performance is not necessarily indicative of future results.
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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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