Alaron Soft Commodity Comment

CHICAGO - Jan 17/07 - SNS -- Following is the cocoa, sugar, orange juice and cotton futures comment from Alaron Trading Corp.

March OJ pushed to a new contract high today of 207.60. Speculators and funds were buyers as prices held support of 200.00. The market has been supported by the freeze in California over the past weekend. There are unconfirmed reports that up to 75% of the crop has been destroyed.

What does this mean to OJ prices? One thing to note is that California oranges are mainly produced for edible purposes. There was talk earlier this week that the California oranges that were affected by the freeze could be turned into frozen concetrate. This line of thinking would actually add supply to an already tight supply situation and in turn, would be bearish. However, there are reports that the California oranges are too damaged to be squeezed into juice.

Now this changes the outlook for this market. Since no oranges will be able to be processed into frozen concentrate, the tight supplies will only get tighter since the Florida crop will have to offset the losses in the California crop. This would not be a big deal, however, Florida is still recovering from the hurricanes in the last few years. This year's crop is only expected to come in at 140 million boxes. The years prior to the hurricanes the Florida crop was producing at least 200 million boxes.

So far the Florida crop has been lucky and has not had to endure the freezing temperatures that the California crop experienced this past weekend. The freeze period is winding down. However, there are some private forecasts that show a potential freeze in Florida in couple of weeks. Traders will continue to monitor the temperatures in Florida. A freeze in Florida would not be a good thing for this market at this time. But if this does occur, we could see OJ prices continue to higher levels.

Boyd Cruel

Alaron Research Team

800.216.1491

bcruel@alaron.com

www.alaron.com

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