Alaron Soft Commodity Comment

CHICAGO - Feb 2/07 - SNS -- Following is the cocoa, sugar, orange juice and cotton futures comment from Alaron Trading Corp.

Cocoa prices gapped lower today as stops were hit below 1600 basis March. Funds and small speculators were noted sellers. The market has been pressured by the lack of fresh news. Prices had been on an uptrend since mid-November and topped out earlier this month. The market was supported on talk of smaller crops from the Ivory Coast and Ghana. This has already been factored into the market. Prices could resume its uptrend if rain does not fall in these regions in the next month. A lack of rain could reduce the production number again. Support for March is at 1570-1575 and resistance is at 1600.

The coffee market continued its downtrend this week as a new monthly low of 115.35 basis March was posted. The market has found support at this level, which is just a tick below the November 2006 low. Prices are overbought and we could see a correction. Like cocoa, this market has been pressured by the lack of news. The long-term trend for this market still is positive as next year's coffee production from Brazil is expected to be smaller than the previous year. However, in the near to short term, there are ample supplies of coffee, which will limit the upside for the next month, barring any bullish news. As of January 25th, stocks in certified warehouses were at 3,738,591 bags with 128,589 bags waiting to be graded. Support for March is at 115.00-115.35. Resistance is at 117.50.

Sugar prices pushed to a new contract low today of 10.53 basis March. The market found support at this level and closed slightly higher for the day. This new contract low was near the 50% retracement level from the 2003 low and last year's high. We could see a technical bounce back to 11.00. This market will remain under pressure as there is a lack of demand. In addition, there are large supplies of sugar available due to Brazil's large crop last year. Unless we see the cash market pick up, we could continue to see prices move lower. Support for MArch is at 10.50-10.53. Resistance is at 11.00.

OJ prices traded in a narrow range today. The market closed higher to end the week after prices held support of 200.00. There has been little news this week. The market will continue to find underlying support as the Florida crop has been estimated at 140 million boxes. The tight supplies in this market got tighter after the freeze in California destroyed a large portion of their crop earlier this month. The Florida Valencia crop will mainly go towards offsetting the losses of the California crop. Technically, if this market closes below 200.00, we could see longs liquidate positions and could see prices push back down to the bottom end of its channel around 194.00-195.00. Support for March is at 200.00. Resistance is at 204.50-205.00.

Cotton prices have been trading between 54.00-55.00 basis March this week. The market closed near the bottom end of the range today as weak demand has put a lid on the upside. The market had a significant rally to end 2006 as there were expectations of strong demand in the first quarter of 2007. However, this demand has not been seen. This week's USDA Weekly Export Sales were reported at 234,500 bales, which came within expectations. If demand remains weak, look for prices to move lower in the next few weeks. Support for MArch is at 54.00 and resistance is at 55.00.

Boyd Cruel

Alaron Research Team

800.216.1491

bcruel@alaron.com

www.alaron.com

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