Three extremely important words come to mind this time of year; Production, Production and last, but not least Production. Though most harvests are not yet in full swing, the impending new crop supply of product is affecting the markets. Further examination will illustrate just how. Let’s move in for a closer look.
Coffee 09/03/2010
Life Time Trading Range 41.50 Cents - $337.50 per Pound
Trades on The ICE 2:30 AM – 1 PM CDT
In analyzing the weekly Coffee chart, I see a market that could move up or down in a big way. The bullish market analyst see’s a running correction to the upside. If fulfilled this could see Coffee trading at 2.00. The bearish, on the other hand, sees confirmation of a major top, and a move down to the 1.56 area. Wednesday’s Coffee close was the third highest in twelve years. The upbeat tone of the equity markets had a buoyant effect on the Coffee market. December Coffee is within earshot of new highs.
A mixed picture is developing regarding Coffee exports. Sumatran export activities are at a standstill. Heavy rains there have interfered with Sumatran harvest activities; exports are down close to fifty percent when compared to the same time last year. On the other hand, Vietnam’s crop has had the benefit of good rainfall recently. This should improve the quality of their Coffee as prior lack of rain and hot temperatures were thought to have caused damaged the crop. Other than Costa Rica, most Central American growing areas have been reporting a slight decrease in their exports at this time. We really can’t get a clear picture until the Brazilian harvest is in full swing.
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: Coffee has moved higher this week. As I write this the market appears to be awaiting a reason, any reason to head for new highs. The stochastic again remains in buy mode. The market is below the top band of the Bollinger study which sits at 194.45 this week This gives the market room to roam to the upside. The R.S.I. stands at 71.54, higher than last week’s print of 68.60 The M.A.C.D. histogram stands at 2.27, a tiny bit lower than last week’s reading of 2.29. Coffee appears to be headed for 2.00 in short order.
Do not trade without the use of protective strategies such as stops and or options.
Cocoa 09/03/2010
Life Time Trading Range $444 – $5379 per Tonne
Trades on The ICE 3 AM – 1 PM
Cocoa has been lower for five weeks now. This market is trading at prices not seen since July of 2009. Downside pressure on Cocoa prices is directly linked to prior reports of improved crop prospects in the major Cocoa growing areas of West Africa. Being extremely sensitive to underlying economic conditions Tuesday’s release of improved U.S. Consumer Confidence came as a surprise and was supportive to Cocoa prices. We must be very careful when analyzing fundamental commodity news. Many news sources will circulate information favorable to their positions and hold back information that is not. This can include traders and government officials. In the industry this is called “Talking ones position”, and it happens every day.
Weather has taken center stage this growing year. Rain of late in West African growing areas has created concern regarding the Cocoa crops quality there. The northern Cocoa growing regions of Nigeria are experiencing flooding as well. Traders still expect a large main crop harvest from the Ivory Coast. The Ivorian harvest is due to get underway October first. Front month London Cocoa contracts had been trading at a premium over the differeds. This is no longer the case as expectations for a large supply of Cocoa this harvest have served to reverse that situation. Cocoa arrivals at Ivory Coast ports for export October 1st 2009 through August 29th 2010 were 1,141,000 tonnes and an increase of 1.3% percent over the 1,126,410 during the same time frame of the 2008 - 2010 season.
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: Cocoa’s price action this week respected support offered by the lower band of the Bollinger study at 2699. The R.S.I. stands at a bearish 4105 and a bit higher than last week’s reading of 4064. The M.A.C.D. histogram stands at -33.38, lower than last week’s indication of -28.91. This market action is somewhat corrective in nature. There just may be a bounce to the upside in the cards. I will keep close watch for further developments.
Do not trade without the use of protective strategies such as stops and or options.
Cotton 09/03/2010
Life Time Trading Range $26.84 – $117.20 per Pound
Trades on The ICE 8 PM – 1:30 PM CDT (Next Day)
The Cotton market made two year highs last Friday and again this Tuesday. A look at the trend in open interest indicates a steady rise over the past three weeks. This year’s U.S. Cotton crop is the product of close to eleven million planted acres. The volume of Cotton planted this year exceeded expectations, but the extremely hot, dry weather this growing season took its toll on the crop. With harvest close at hand, the condition of the U.S. Cotton crop has been downgraded somewhat by the USDA. This is supportive to the market. Thus far this marketing year U.S. Cotton exports have been better than expected. Economic reports have been improving of late as well. It’s difficult to find any bearish indications at this time. That being the case traders must be ever alert and swivel their heads like fighter pilots!
Net U.S. exports of upland Cotton for the week ending August 26th 2010 totaled 245,800 running bales, down 48 percent from the prior week. Keep in mind that weekly exports of just 163,600 running bales are necessary to meet the USDA’s export forecast for this marketing year which began August 1st. So far we are batting 1000! Based on worldwide weather factors it appears that supply tightness will remain through the 2010 – 11 marketing year. This is great news for U.S. Cotton producers!
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: Cotton has made new highs for two weeks in a row! As I said last week, be wary of this sustained move above the top band of the Bollinger study. Generally markets do not remain in that position for long periods of time. The stochastic is in buy mode, I would not expect anything else. The R.S.I. stands at a bullish 68.48, and higher than last week’s indication of 65.98. The M.A.C.D. histogram is improved at 1.06, higher than last week’s reading of.80. Cotton appears overbought
Do not trade without the use of protective strategies such as stops and or options.
Sugar 09/03/2010
Life Time Trading Range 2.30 Cents – 66.00 Cents per Pound
Trades on The ICE 2:30 AM – 1 PM CDT
Forecasts for a large surplus of Sugar following this harvest have been tempered by the effects of poor weather in Brazilian, Russian and Pakistani Sugar growing areas. Supply following this seasons harvest should be closer to normal than the surplus that had been expected. The Sugar crop of India was not adversely affected by poor weather. Word is India will be exporting as much as two million tonnes of Sugar to assist in making up any shortfall in supply. According to a National Cooperative, Sugar production in India this growing season could surge as much as 38% on increased plantings and favorable weather.
The last three trading weeks have seen Sugar trade above the psychological 20.00 area. This price level had not been visited since March of this year. Support rests just below at 19.64. This is the 38.2 percent Fibonacci retracement of the huge deleveraging break from 30.40 down to 13.00. A lower volume of Sugar than anticipated this season will be supportive to the Market.
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: Sugar moved up nicely this week. The market is facing challenges of the 50 bar moving average and the upper band of the Bollinger study. The stochastic remains locked in buy mode. R.S.I. stands at 59.92, higher than last week read of 57.01. The M.A.C.D. histogram stands at +.83, .01 lower than last week’s read of +.84. The Sugar market appears quite firm at this time.
Do not trade without the use of protective strategies such as stops and or options.
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