Alaron Soft Commodity Comment

CHICAGO - Dec 18/06 - SNS -- Following is the cocoa, sugar, orange juice and cotton futures comment from Alaron Trading Corp.

COCOA: (Trading Hours: 7:00am-10:50am CST) (Report, as of 12/15 close)

Prices pushed to a new monthly high this week of 16.86 basis March. Fund and speculative buying continues to support this market. Prices have retreated from this high as the market became overbought. The market has been supported as supplies have been tight in the Ivory Coast. Cocoa bean arrivals are well behind last year's pace. We are seeing a contra-seasonal movement in this market due to this. If arrivals do not pick up in the next few weeks, we could see prices continue to move higher and test the 1700-1720 level basis March. Providing additional support was news that a plot to assasinate the Ivory Coast President was halted. Traders will continue to monitor this political situation. In the near-term, we could see prices consolidate from this overbought situation as prices have rallied over 200 points this month. . Support for March is 1640. Resistance is at 1680-1690.

COFFEE: (Trading Hours: 8:15am-11:30am CST) (Report, as of 12/15 close)

This morning, prices opened at 130.00 basis March to post a new monthly high. However, there was no follow-through buying as origins were sellers at this level. As prices moved lower, funds and specs began liquidating long positions. Prices closed 460 points below the monthly high. After the close, Conab released their first estimate for the 2007-2008 Brazilian coffee crop. They estimated the crop between 31.1 to 32.3 million bags. Last year's crop came in over 42 million bags. Traders had been anticipating a forecast between 30-35 million. With this low crop estimate, there could be a large world production deficit for the 07-08 marketing year. Also after the close, the Green Coffee Association released its monthly stock report. It showed that as of 11/30, U.S. stocks were down 163,259 bags to 5.047 million. The market will find some underlying support from the Brazilian crop estimate. Stocks in certified warehouses as of 12/15, were at 3,675,070 bags with 134,515 bags waiting to be graded. Support for March comes in at 124.00. Resistance is at 130.00.

SUGAR: (Trading Hours: 8:00am-11:00am CST) (Report, as of 12/15 close)

Prices continue to trade sideways at this lower end of its trading range. There is a lack of news in this market. Trade buying supported the market this week as prices continue to hold the monthly low of 11.15. The cash market has been quiet. There is an abundant amount of supply and if demand remains weak, prices could push lower. The strength in the energy market could provide underlying support for this market. Support for March is at 11.15. Resistance is at 11.60.

OJ: (Trading Hours: 9:00am-12:30pm CST) (Report, as of 12/15 close)

OJ prices had a wide trading range this week. Earlier in the week, prices pushed down over 1000 points on a bearish USDA crop estimate. The USDA raised its estimate for the Florida crop to 140 million boxes versus 135 million in its October report. Traders were expecting na unchanged to slightly lower estimate. January options expired today, which added more volatility to the market. Prices were trading on both sides of the 200.00 strike for most of the week. However, trade buying pished prices higher and locals were caught short this market and prices popped up to 205.20. We could see prices trade sideways to lower through the end of the year due to this bearish estimate. In addition, the 7-10 day outlook is for milder temperatures in the Florida citrus-growing regions. We are currently in the period when freezing temperatures can occur in Florida. This period will run through the middle to end of January. Spread trading will be active in the next two weeks ahead of first notice day for the January contract on January 2nd. Support for January is at 200.00. Resistance is at 205.00-206.00.

COTTON: (Trading Hours: 9:30am-1:15pm CST) (Report, as of 12/15 close)

Prices continue to move higher today as prices pushed to a 2-month high of 55.35 basis March. Prices have been moving higher since mid-November as the market is expecting strong demand from China in the 1st quarter of 2007. The U.S. Weekly Export Sales hve been weak and have reached only 35% of the USDA's forecast for the 2006-2007 marketing year. In this week's report, China only purchased 33,600 bales. The strength in the Dollar could be limiting sales from China. We will need to see demand get stronger in early 2007 or prices could move lower. Looking ahead to next year, cotton could be losing acreage to corn and beans. This could provide underlying support. The USDA will release its Prospective Plantings Report at the end of March. Support for March is at 54.00. Resistance is at 55.50.

Boyd Cruel

Alaron Research Team

800.216.1491

bcruel@alaron.com

www.alaron.com

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