Alaron Softs Comment

CHICAGO - Mar 6/08 - SNS -- Following is the orange juice, cotton and coffee comment from Alaron Trading Corp.

This week, we have seen the cotton market  hit its  daily price limit in 3 of the 4 sessions. In fact, after it hit limit up on Monday, the daily limit expanded to 400 points. This is because of a rule in the ICE exchange that states "whenever any 2 future contract months with the highest open interest settles at 84.00 or higher, then all months may trade at 4 centds above or below the previous session's settlement price."   Today, we have started to see the longs liquidate their positions as the May contract closed limit down at 85.28. Based on the close today, we could see another round of selling in tomorrow's session. Why did the market rally? Well, as I mentioned in my last report, the rally was due to fund buying. There has been no fundamental news to warrant these  record levels. The funds took control of this market as they looked at cotton as being "undervalued" in relation to the corn, wheat, and bean markets. There isn't any bullish news in this market. The short-term fundamentals are bearish as we could see a revision downward in exports, which in turn would cause an increase in ending stocks. This information will be released in next Tuesday's USDA Crop Production/Supply and Demand Report. It will be released at 7:30am CST. The only thing that is supportive to this market are the expectations for a loss in planting acreage. However, this has already been factored into the market. The trade is expecting a loss of about 1.5 -1.8 million acres. Support for May is at 81.00. Resistance is at 86.00.

Boyd Cruel

Alaron Research Team

800.563.9510

bcruel@alaron.com

DISCLAIMER: Futures and options trading involve substantial risk. The valuation of futures and options may fluctuate, and as a result, clients may lose more then their original investment. In no event should the content of this website be construed as an express of an implied promise, guarantee or implication by of from the author(s) that you will profit or that losses can or will be limited in any manner whatsoever. Past performance is not necessarily indicative of future results. Information provided on this website is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. Alaron Trading Corp. its officers, directors, employees and brokers may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report.

Information on this page is derived from third parties and is deemed to be reliable. STAT Communications Ltd. accepts no responsibility for errors, omissions or inaccuracies in any of the material presented on this web site. Opinions expressed on this web site are those of the respective individuals and/or institutions and do not represent the opinions of STAT Communications Ltd. and/or STAT Publishing or its staff and/or management.