Alaron Softs Comment

CHICAGO - Sep 12/08 - SNS -- Following is the orange juice, cotton and coffee comment from Alaron Trading Corp.

This morning, the USDA released its Monthly Crop Production/Supply and Demand Report. This report was neutral to slightly bearish. The USDA raised ending stocks to 4.9 million bales from 4.6 million last month. In addition, the USDA lowered exports to 14.5 million bales versus 15 million last month. I have said many times in my reports how demand is going to be the key for cotton prices to move higher. This view has not changed. The strength in the dollar will not help this situation so there is a possibility that exports could be reduced in future reports. Production has dropped drastically (19.21 million bales in the 07-08 marketing year to 13.85 million bales in 08-09), which should be bullish factor. However, lower production doesn't always mean higher prices, especially if demand is weak. The USDA's Weekly Export Sales Report will be watched by traders as this is a gauge of demand. This report is released  every Thursday at 7:30am CST.

Cotton prices have been moving lower since the beginning of the month. In the last week, new contract lows were made in 4 straight sessions. This market has been pressured by the overall weakness in the commodity markets, which is associated with the strength in the Dollar. Despite the neutral to slightly bearish report today, cotton prices moved higher due to oversold conditions and the weakness in the Dollar. If the market has found a bottom, we could see prices retrace back to the 70.00 level basis December. Support for December is at 63.60. Resistance is at 65.80-66.00.

Boyd Cruel

Alaron Research Team

800.563.9510

bcruel@alaron.com

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