With the end of summer fast approaching, it’s time to focus on the upcoming harvest. The fourth quarter sees a majority of the world’s crops harvested. We generally see supply shortfalls dissipate and softness in the markets as the new supply enters the pipeline. The Impact of economic news will certainly affect the markets, but to a lesser degree than it did during the growing season.
Coffee 08/20/2010
Life Time Trading Range 41.50 Cents - $337.50 per Pound
Trades on The ICE 2:30 AM – 1 PM CDT
Short term supply tightness continues. If all goes as planned, this season’s huge Brazilian crop will see the supply deficit vanish and become one of surplus. Better growing conditions in Colombia this growing season will bring a larger crop as well. Heavy rains in Malaysia have negatively impacted Coffee bean quality and delayed the Malaysian Coffee harvest by sixty to ninety days. The Vietnamese Coffee supply is tight and supporting high cash Coffee prices at present. This should dissipate once harvest gets into full swing.
This market is confounding the savviest of traders. Coffee sits at high price levels awaiting the huge new supply to come online. This is extremely unusual and points to much higher Coffee prices in the near future.The market gave us a taste of that this week. Coffee rallied to a new high of 184.80, closing at 84.55 up 755 points on the week. My take on this is 200.00 coffee is just around the corner.
Technical Analysis is a methodology. The information below is not to be taken as trading advice or as a recommendation to buy or sell any commodity future or option. It may or may not agree with the fundamental analysis that appears above.
Weekly Technical Indications: This week a majority of the price action in Coffee occurred in an area that until now had only been visited for very short periods of time. This price area had until now only traded when the market was putting in a spike to the upside. This has very bullish implications. Examine the weekly continuous contract candlestick chart and you will see what I am referring to. If you don’t have access to one I will send you one; just give me a call. 800-611-6974.The stochastic is in buy mode. The R.S.I. stands at 72.55, higher than last week’s reading of 68.75. The M.A.C.D. histogram stands at 2.91 and a bit higher than last week’s reading of 2.8. The bull is on a rampage.Don't wear red!
Do not trade without the use of protective strategies such as stops and or options.
Cocoa 08/20/2010
Life Time Trading Range $444 – $5379 per Tonne
Trades on The ICE 3 AM – 1 PM
It appears that Cocoa has found at least one reason to move lower, and a big one at that! The Ivorian mid crop is said to be much larger than last years. Cocoa farmers there are predicting a larger main crop as well. The swing from a multiyear supply deficit to one of surplus should serve as resistance to higher prices. Of course, if this does not come to pass, prices will most likely move higher. As expected, the promise of an increase in supply has brought the market to the low end of its consolidation, now looking like it is ready to make a run to the low of 2767 posted May 17th.
Due to last year’s high Cocoa prices, some countries are taking steps to improve their Cocoa production. Cameroon, the fifth largest Cocoa producer, will be building ten thousand modern Cocoa drying ovens to provide Cocoa farmers with the facilities to handle increased production and improve the quality of Cocoa grown in areas hit by heavy rains. This is according to the Cocoa and Coffee Subsector Development Fund, or FODECC of the Cameroon.
Wednesday was first notice day for September ICE Cocoa futures. Five hundred thirteen contracts were posted for delivery. There were no surprises, and nothing out of the ordinary here. This should put to rest concern that a reoccurrence of the grab during LIFFE Cocoa’s July delivery cycle. Someone is holding a lot of Cocoa. With production on the upswing I am quite concerned that this supply could quickly become overbearing if that someone decides to sell.
Technical Analysis is a methodology. The information below is not to be taken as trading advice or as a recommendation to buy or sell any commodity future or option. It may or may not agree with the fundamental analysis that appears above.
Weekly Technical Indications: This week Cocoa traded down to 2810, just a touch above the 100 bar moving average sitting at 2804. This should serve as support for the time being. The next level of support is the 2750 area. The stochastic remains firmly entrenched in sell mode. The R.S.I. stands at a bearish 44.88, but a shade higher than last week’s indication of 44.69. The M.A.C.D. histogram stands at -13.09, much and lower than last week’s indication of -0.23. At this point there are no technical reasons to be long this market!
Do not trade without the use of protective strategies such as stops and or options.
Cotton 08/20/2010
Life Time Trading Range $26.84 – $117.20 per Pound
Trades on The ICE 8 PM – 1:30 PM CDT (Next Day)
Something is going on in the Cotton market that requires close scrutiny. Cotton prices have been treading water just below the highs. There seems to be no fear in hearts of importers as they continue to buy for coverage at these high prices. Could it be that U.S. growers have taken advantage of the high price levels and are fully hedged? Well bully for them if they have! Last week I made a point that Allenberg Cotton had booked more Cotton sales for this marketing year than at any time during the last ten.
Net Cotton exports for the week ending August 12th 2010 totaled 447,400 running bales. The 2010-11 marketing year began August 1st. A weekly export tally of 163,600 running bales is required to meet the USDA’s export forecast for the 2010-11 marketing year. Traders had been expecting the export numbers to come in lower than last week’s 341,800. Goes to show you how wrong we humans tend to be.
Technical Analysis is a methodology. The information below is not to be taken as trading advice or as a recommendation to buy or sell any commodity future or option. It may or may not agree with the fundamental analysis that appears above.
Weekly Technical Indications: This week Cotton backed off a bit, failing to put in a new high. Previously it had made weekly highs five weeks in a row. The stochastic is in buy mode. The R.S.I. stands at a bullish 63.69, but a bit lower than last week’s indication of 64.31. The M.A.C.D. histogram is improved at .53, a shade higher than last week’s reading of.25. This week’s price action was neutral at best.
Do not trade without the use of protective strategies such as stops and or options.
Sugar 08/20/2010
Life Time Trading Range 2.30 Cents – 66.00 Cents per Pound
Trades on The ICE 2:30 AM – 1 PM CDT
Sugar is another of the soft commodities that has adopted a devil may care attitude while starring a huge influx of supply right in the face. Last year’s high Sugar prices will kick up production as greed overcomes fear in a majority of growers’ minds. Expectations are for an enormous Sugar crop this harvest. Brazil’s harvest should be huge and India’s supply situation should shift from one of supply deficit to one of surplus.
Talk is that the Indian Sugar harvest will be twenty three million tons. It could be quite a bit larger as it has been reported that key growing areas have increased the amount of Sugar cane planted this growing season as much as thirty five percent. India has begun exporting sugar as well. There is a very large concentration of speculators holding long positions in Sugar. If supply does hit the cash market as expected, these speculators will find they are driving the wrong way on an exceptionally busy one way street!
Technical Analysis is a methodology. The information below is not to be taken as trading advice or as a recommendation to buy or sell any commodity future or option. It may or may not agree with the fundamental analysis that appears above.
Weekly Technical Indications: This week’s price action saw Sugar move up to the top band of the Bollinger study and stop dead in it’s tracks. The stochastic continues to be in sell mode. R.S.I. has moved up to 56.97, higher than last week’s reading of 55.09. Again, this week there was not much change in the M.A.C.D. histogram. It stands at +.87 versus +.86 last week. Whether it be to the downside or sideways consolidation; Sugar appears to be in need of some corrective activity.
Do not trade without the use of protective strategies such as stops and or options.
There is a substantial risk of loss in trading futures and options. Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. PFGBEST, its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.
