PFGBEST Softs Comment

CHICAGO - Mar 10/10 - SNS -- Following is the orange juice, cotton and coffee comment from PFGBEST Research.

The Soft Spot(3)

The latest ADP employer services report showed that private employers furloughed 20,000 workers in February. Not only was this a marked improvement from the 60,000 furloughed in January, but planned future job cuts also retreated to their lowest level in four years. Non Farm Payrolls released Friday morning came in at ' 36,000 just about 50% less than the consensus. These are more signposts that we are in the early stages of recovery from recession. For three weeks now, the Reuters Jeffries Commodity Channel Index has been stalled just below the 38.2% retracement of the 2008-9 deleveraging break. It also tested the bottom band of the Bollinger study the nine bar moving average this week, but didn't stay down there very long. We just have to watch closely for a violation of this area or a move to the upside. The jury is still out on the direction commodities want to take. Practice sound money management principles and use realistic risk parameters in your trading.  

Open an account with Robin - E-Mail  rrosenberg@pfgbest.com or telephone 800.611.6974.

You can open an account online in a matter of minutes, or if you prefer a paper account form we will send one your way.

Direct to floor order execution where possible.

Options are a specialty.

Coffee 03/5/2010

Life Time Trading Range 41.50 Cents  - $337.50 per Pound

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

This once extremely strong market seems to have taken on the aura of the enduring Atlas, carrying the weight of the world on his shoulders. Bulls are concerned that higher production from Brazilian and Colombian new crops are inevitable. ICE coffee stocks of certifiable deliverable coffee are at seven year lows. This can be viewed as bullish or bearish. Many times the number seven signifies the ending of a cycle. Seven days in the week ' And on the seventh day he rested ' Seven colors in a rainbow ' seven years of plenty followed by seven years of famine, and so on.

In technical analysis, an up or down run in price of seven periods is many times followed by a correction. With today being Friday, Coffee is toying with the 133.55 weekly sell number. I must say that the technical picture for Coffee looks to be bearish on a weekly basis. After rallying to the bottom of the previous consolidation, the market has again turned down and is close to breaking down and out of a down flag formation. If this were to happen, the down flag projects the market to the 120.00 area. There is a glimmer of hope here however. In the last five weeks, Coffee has pierced the lower Bollinger band four out of the five, but never closed below it. There is very strong support at this level. This week at this time ' 8:36 CDT the band is sits at 129.02. It will vary depending on market action.

I will opt to take to the side lines and watch this market closely for trading opportunities.

May Coffee must close above 133.55 Friday to turn the weekly trend up.

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

Open an account with Robin - E-Mail  rrosenberg@pfgbest.com or telephone 800.611.6974.

You can open an account online in a matter of minutes, or if you prefer a paper account form we will send one your way.

Direct to floor order execution where possible. Options are my specialty.

Cocoa 03/5/2010

Life Time Trading Range $444 ' $5379 per Tonne

Trades on The ICE 3 AM ' 1 PM CDT

Supply tightness has been alleviated by a bountiful Ivory Coast harvest. The international Cocoa Organization ( ICCO ) has revised its global supply / demand forecast for 2008-9 from a deficit of 28,000 tonnes to a surplus of 32,000 tonnes. The ICCO is also predicting a global deficit of 18,000 tonnes for the 2009-10 growing season. A robust mid crop Cocoa harvest in West Africa could change that as well. We shall see.

As you can deduce from the above, our raging bull market has caught the flu. There are fewer reasons to be long Cocoa as each day passes. We may get a correction to the upside soon. This would be an opportunity to short this market.

Cocoa's high in January was 35.12. As I write this, Cocoa is trading 28.64 and trending lower. Last week Cocoa closed below the bottom band of the Bollinger study and appears it will do so this week as well.

Some of you may remember me writing about the importance of highs and lows made by markets in the month of January. For the benefit of those that are new to the concept, I will cover it again. The January highs and lows of a futures market should be monitored closely each year. If the market is above the January high on February 1^st you should consider the trend to be up. Conversely, if the market is below the January low it should be considered to be in a downtrend. Highs and lows posted in January will many times hold for three to six months.

I recommend selling Cocoa futures, buying puts or put spreads into strength.

May Cocoa must close above 29.96 Friday to turn the weekly trend up.

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

Open an account with Robin - E-Mail  rrosenberg@pfgbest.com or telephone 800.611.6974.

You can open an account online in a matter of minutes, or if you prefer a paper account form we will send one your way.

Direct to floor order execution where possible. Options are my specialty.

Cotton  03/5/2010

Life Time Trading Range $26.84 ' $117.20 per Pound

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

The USDA Foreign Agricultural Service reported Thursday that exports of U.S. cotton for the week ending 2/25/2010 were 289,400 running bales. This is a marketing year high, up 25 percent from the previous week and up 38% from the prior 4-week average.  Traders had been looking for 200,000. Foreign demand and concern regarding the size of U.S. ending stocks were the foundation for the recent run up in Cotton prices.

U.S. Cotton Acreage for 2010 is expected to be 10.093 million acres ' an increase of just under 850, 000 acres nationwide.   The biggest increase will be seen in the Southwest, where Texas acreage will increase by over 400,000 acres. Texas will lead the nation by growing about 54% of the 2010 crop.

Cotton has seen additional corrective action this week. Even though the break in price did little immediate damage to the technical picture, there are reasons for bulls to be cautious. The weekly chart indicates penetration of and a close above the top Bollinger band for two weeks back to back. This is a rare occurrence in Cotton. Generally it takes place after a strong and prolonged one way move like the one just experienced. The weekly stochastic has gone flat and relative strength has lost upside momentum. This market may have just gone too far, too fast. The candlestick formation reflecting this week's market action is decidedly bearish. Cotton has retraced a bit more than a 61.8% Fibonacci retracement of the break in price experienced from March to November 2008. Be on your toes, this market could turn down in a heartbeat! If you would like to see what I am referring to just send me an e-mail, I will send a chart to you. If you would like to discuss it, feel free to give me a call.

I have no trade recommendations for cotton this week. I will take to the sidelines and await opportunity.

May Cotton must close below 80.07 Friday to turn the weekly trend down.

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

Open an account with Robin - E-Mail  rrosenberg@pfgbest.com or telephone 800.611.6974.

You can open an account online in a matter of minutes, or if you prefer a paper account form we will send one your way.

Direct to floor order execution where possible. Options are my specialty.

Sugar 03/5/2010

Life Time Trading Range 2.30 Cents ' 66.00 Cents per Pound

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

Sugar prices, raw Sugar in particular, has come off close to 30 percent from its highs. This sell-off was for the most part due to long liquidation by commodity funds. Sugar prices are generally firm due to tightness in supply this time of year. This is primarily because we are between the harvest of the 2009-10 crop and the start of the 2010-11 growing season. We have just experienced a historical period of supply tightness. As it now appears, more normalized production is expected this growing season as compared to last. Whether or not it will come to pass is up to Mother Nature. So, here we have a situation where pockets of supply tightness still exist. And there are buyers hiding in the bushes awaiting new Brazilian production. We shall see how this all turns out later this year.

Here are a couple of items that are worthy of our attention. There has been talk lately that soda bottlers are curtailing the use of high fructose corn syrup (HFCS) and switching back to cane sugar as their sweetener of choice. Pepsi will be releasing both Pepsi and Mountain Dew Throwback in April.  These are original recipe, cane Sugar sweetened versions of these beverages. I can see it now - "Sweetened with real cane sugar!" Ethanol, being the fuel of the day, could move higher as the macroeconomic picture improves and see a larger portion of the Brazilian Sugar crop diverted to ethanol production than presently planned. Both of these situations will weigh on supply and be supportive to Sugar prices.

Technically, Sugar has broken down to the consolidation that took place from September through November of 2009. Generally, after a market breaks out of a consolidation area like Sugar did and re-enters that price area it will test the low end of the consolidation. The low end is 20.50. A test of 20.50 could very well be in the cards. I see few, if any indications that the market is oversold. But a corrective bounce from here cannot be ruled out.

I reccommend selling Sugar futures or  purchasing puts or put spreads on strength.

May Sugar must close above 23.92 Friday to turn the weekly trend up.

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

Open an account with Robin - E-Mail  rrosenberg@pfgbest.com or telephone 800.611.6974.

You can open an account online in a matter of minutes, or if you prefer a paper account form we will send one your way.

Direct to floor order execution where possible. Options are my specialty.

PFGBEST Research Team

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

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