PFGBEST Softs Comment

CHICAGO - Nov 6/09 - SNS -- Following is the orange juice, cotton and coffee comment from PFGBEST Research.

The Soft Spot(2)

This week has presented us with gold nearing $1100 an ounce and the continuing tug of war involving the U.S. dollar vs. just about every other currency out there. The U.S. dollar did put in a rally attempt earlier this week but has now sold off a bit and is marching in place. Soft commoditie

Robin's Rant  

This week has presented us with gold nearing $1100 an ounce and the continuing tug of war involving the U.S. dollar vs. just about every other currency out there. The U.S. dollar did put in a rally attempt earlier this week but has now sold off a bit and is marching in place. Soft commodities have again presented us with a mixed bag of results this week.  

If you require clarification of anything presented here or just want to talk about the markets feel free to give me a call. (800) 611-6974

Coffee 11/5/2009

Life Time Trading Range 41.50 Cents  - $337.50 per Pound

Trades on The ICE 2:30 AM ' 1 PM CDT

There are quite a few reasons for coffee to remain in an uptrend. Let us review some. First and foremost is the continuing strength of gold and weakness in the U.S. dollar. This alone has brought a large amount of investor money into the coffee market. Open interest has increased upwards of 25% in the last month! There has been a huge decline in exchange coffee stocks. Columbian production is well below expectations. The effects of El Nino in the Pacific Ocean have created exceedingly dry weather in the growing areas of Columbia. On the other hand, Honduras is awaiting arrival of a hurricane which could wreak havoc on their coffee crop as it is now ready for harvest. Now that the present has been covered, let us look into the future. We await news of the Vietnamese harvest which will soon be in full swing. The quality of flowering for next year's Brazilian crop has yet to be determined. Columbia and other growers of light Arabica coffees have taken advantage of large premiums over the futures market to purchase and increase the use of fertilizer as well as apply other enhancements that will benefit next season's crop. This situation leads me to believe that spreads buying the front month contracts and selling the back month contracts would be a reasonable way to trade this market.

Do not trade without protective strategies such as stops and or options.

Cocoa 11/5/2009

Life Time Trading Range $444 ' $5379 per Tonne

Trades on The ICE 3 AM ' 1 PM CDT

Cocoa, as I see it, is acting toppy here. The supply tightness that was thought to exist earlier this harvest period is disappearing. Cocoa is trading near thirty year highs and is in need of bullish supply side news to continue trading in this area. The amount of cocoa arriving at Ivory Coast ports is not only larger than expectations, but also of acceptable quality. Good rains through November will be necessary to ensure a good Ivory Coast harvest. We are about ten days from first notice day for the December contract. There are some mighty large profits on the books of the longs. In a bullish market scenario, it is common for the longs to roll to the next month by selling their holdings in the December contract and buying the March 2010 contract. With good harvest news emanating from the Ivory Coast and a lack of bullish news, profit taking could serve to cap rallies at this time  

Do not trade without protective strategies such as stops and or options.    

Sugar 11/5/2009

Life Time Trading Range 2.30 Cents ' 66.00 Cents per Pound

Trades on The ICE 2:30 AM ' 1 PM CDT

Sugar reached 28 year highs in early September and has been in a sideways trading range ever since. This backing and filling action should be construed as bullish market action. The market is shaking off the overbought condition created on its trek to recent highs. After two years of disappointing harvests in India, sugar usage has drastically outpaced supply. Tightness of supply has not been this evident since the early 1970's and 1980's when the highs were 60 cents and 45 cents respectively. The commitment of traders report shows there is still room for speculative buying. There have been no signs of a major top having been put in and open interest is at a manageable level. Bullish undertones have created an environment that should cause sugar futures to begin another leg to the upside; 29.00 being the first objective.

Do not trade without protective strategies such as stops and or options.

Cotton  11/5/2009

Life Time Trading Range $26.84 ' $117.20 per Pound

Trades on The ICE 8 PM ' 1:30 PM CDT (Next Day)

Rain, Rain let's keep it that way! The wet weather in the Mississippi Delta seems to be all that's holding cotton prices where they are. The bolls are open and suffering varying degrees of moisture damage. One report said the Arkansas cotton crop is heavily damaged with no hope to recover. Export sales activity has been spotty at best. The weather is forecast to be dry in the Delta through early next week and extremely dry in the Texas growing areas. This should serve to put a lid on cotton prices over the next few sessions. After putting in a high of 69.49 the week of 10/12/09 cotton has been in a trading range bounded by 69.26 and 66.10. Presently the weekly chart has resistance pegged at 68.93 which is the top band of the Bollinger study.  

Do not trade without protective strategies such as stops and or options.

Good Trading!

Robin Rosenberg (800) 611-6974  

rrosenberg@pfgbest.com  

PFGBEST Research Team

Phone: 800-361-6855 or 319-553-2181

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