PFGBEST Softs Comment

CHICAGO - Jun 15/12 - SNS -- Following is the orange juice, cotton and coffee comment from PFGBEST Research.

The Soft Spot(70)

By Robin Rosenberg

The Soft Spot

By Robin Rosenberg,

PFGBEST

(800) 611-6974

RRosenberg@PFGBEST.com

COFFEE

Forty Year Trading Range: 41.50 cents to $3.37.5 per lb

Trades on the ICE from 2:30 a.m. to 1:00 p.m. CDT

Colombia's 2012 Coffee production may be it's lowest in more than 30 years. The historic production of years past might never be reached again. The country's output last year was 7.8 million 60 kilo (132 lbs) bags and the lowest in three decades. This caused Colombia to slide from the world's third largest Coffee producer to fifth. Behind Brazil, Vietnam, Indonesia and Ethiopia.

Coffee output has been negatively affected by four years of heavy rains as well as disease. An additional factor affecting the country's Coffee production is the plantation renovation program put in place by the government. It will take some time for new Coffee trees to mature and begin producing. The average maturation time for a Coffee tree is three to five years. Peak production is reached in ten to fifteen

In the twelve months preceding April there were declines in output compared to a year earlier. April's Coffee production was estimated to be 580,000 60 kilo (132 lbs) bags and up eleven percent from a year ago. The Colombian Coffee growers' federation Fedacafe estimates May production to be 689,000 60 kilo (132 lbs) bags. If so that would equal a two percent rise above last year. This could very well be the start of a positive turnaround for Colombia's Coffee production.

Technical analysis is a methodology. The information below is not to be taken as trading advice or as a recommendation to buy or sell any commodity future or option. It may or may not agree with the fundamental analysis that appears above.

Weekly technical indications on Friday, June 15th: At this time the week's trading range is 157.90-148.85, the last print is 150.55. The stochastic remains in buy mode. RSI at 19.35 is weaker than last week's indication of 20.03. The M.A.C.D. histogram at -1.06 is a bit lower than last week's reading of -0.63. The market continues to trade just above the lower Bollinger band. Again, markets always look their worst at the bottom. A weekly close of 158.15 or higher in July coffee will turn the weekly trend up. Expect all surprises to be to the upside.

COCOA

Forty Year Trading Range: $4.44 to $53.79 per Tonne

Trades on the ICE from 3:00 a.m. to 1:00 p.m. CDT

Civil unrest is again kicking up it's heels in the Ivory Coast. Last Friday seven U.N. peacekeepers from Niger were killed in a raid in the southwestern town of Tai near the Liberian border. Talk is that the U.N. peacekeepers lost their credibility by taking one side and are not keeping the peace. This has to be stopped in it's tracks immediately. The country's Cocoa industry is at risk. This attack is likely related to the trial of the country's former president Laurent Gbagbo. Proceedings are scheduled to get underway June 18^th at The Hague.

The Cankerworm (think Inchworm) attacks in Southwest Nigeria have been brought under control. Fortunately the Nigerian government provided the proper insecticide (the pathogen Bacillus thuringiensis) in the quantity necessary to do so. If not, the damage would have devastated the Cocoa crop as well as the farmer's pocketbooks. Did you ever watch an Inchworm eat? It can devour a leaf in what seems like no time. All that is left are the stem and branch veins. Prices for graded Cocoa beans in southwest Nigeria are higher due to their scarcity. Nigeria's 2012-13 main Cocoa crop is scheduled to begin in August.

Mid crop harvest is starting late in the Ivory Coast this year. Early reports indicate the long dry spell earlier in the season damaged it's Cocoa trees. The harvested beans are smaller than normal. Small beans are difficult to market. My guess is they will be processed and sold as semi finished or finished products like powder and butter. This is one of the reasons the country has become a major Cocoa processor. The International Cocoa Organization has said it expects emerging market Cocoa demand to remain strong this season. This could assist in holding Cocoa prices at their present level or higher.

Technical analysis is a methodology. The information below is not to be taken as trading advice or as a recommendation to buy or sell any commodity future or option. It may or may not agree with the fundamental analysis that appears above.

Weekly technical indications for Friday, June 15th: At this time the week's trading range is 22.14-21.79 the last print is 22.05. The stochastic remains in sell mode. RSI at 45.35 is higher than last week's indication of 44.92. The M.A.C.D. histogram at 4.82 is higher than last week's indication of 3.23. The majority of this week's market action again took place between the 9 bar average and the center Bollinger band. Top to bottom the market pierced both of those indicators and now resides just below the center Bollinger band. A weekly close of 21.72 or lower in July cocoa will turn the weekly trend down.

COTTON

Forty Year Trading Range: 26.84 cents to $2.27.00 per lb.

Trades on the ICE from 8:00 p.m. to 1:30 p.m. CDT (Next Day)

I'm getting quite scientific this week. This is the second time I've mentioned BT (Bacillus thuringiensis). BT Cotton is a variety of cotton seed developed with BT that keeps insects away. Concerns had been raised over toxins produced by BT crops. In the U.S. there is concern that BT crops are killing off the Honey bee population.

Cultivation of BT cotton seeds in India began in 2002-03. Since then the average income of the countries Cotton farmers has increased by near 375 percent. Yield has improved by 4.95 percent and Cotton growing area by 4.91 percent. Overall, production has increased some 9.25 percent across India's Cotton growing areas. As long as wildlife is not negatively affected it looks like we are on to something here. Insecticide manufactures are not happy about this development.

Cultivation of hybrid BT cotton seeds, which began in 2002-03, has seen the average income of farmers increasing by almost 375 percent, the average cotton yield by 4.95 percent, cotton areas by 4.91 percent and production by 9.25 percent across India's major cotton growing states,' said the study.

The USDA has forecast 2012-13 world Cotton ending stocks at a record of 74.51 million 480 pound bales. That's up 1.03 percent from last week's estimate of 73.75 million bales.

Technical analysis is a methodology. The information below is not to be taken as trading advice or as a recommendation to buy or sell any commodity future or option. It may or may not agree with the fundamental analysis that appears above.

Weekly technical indications for Friday, June 15th: At this time the week's trading range is 81.37-73.27, the last print is 79.92. The stochastic is in buy mode. RSI at 42.49 is stronger than last week's indication of 32.23. The M.A.C.D. histogram at -1.76 is lower than last week's reading of -2.45. Currently above the 9 bar average, July Cotton had it's best upside week in months. A weekly close of 69.19 or lower in July Cotton will turn the weekly trend down. Expect surprises to be to the upside.

SUGAR

Forty Year Trading Range: 2.30 cents to 66.00 cents per lb.

Trades on the ICE from 2:30 a.m. to 1:00 p.m. CDT

China's January through June Sugar imports stand at 600,000 tonnes. 500,000 tonnes of which were purchased in the first quarter of 2012. The second half of 2012 could see China's Sugar imports down 25 percent on the year. So, China's Sugar imports will have little effect going forward in 2012.

There are a number of issues that should be supportive to Sugar prices. If Brazil's poor early Center South crush is an indication of what's to come Sugar prices could continue to move higher. The Indian monsoon may not bring the amount of rain necessary to produce a hefty crop. This is due to the formation of an El Nino the equatorial Pacific Ocean. El Nino can also cause severe drought in Southeast Asia. In 1998 the region suffered the worst drought in 100 years due to the effects of an El Nino.

Ramadan is on the horizon and India's wedding season is not far behind. I do not like the odds for a resumption of the down trend in Sugar. The ethanol, Sugar switchover point has been 19 to 20 cents a pound for quite some time. The need to factor in the Brazilian real's depreciation has created a stumbling block for many analysts. According to Rabobanks Andy Duff Sugar was only marginally more renumerative than ethanol at the end of last month. If mills decide to convert more Sugarcane to ethanol production than refined white Sugar it will buoy Sugar prices as well.

Technical analysis is a methodology. The information below is not to be taken as trading advice or as a recommendation to buy or sell any commodity future or option. It may or may not agree with the fundamental analysis that appears above.

Weekly technical indications for Friday, June 15th: At this time the week's trading range is 20.62-19.81, the last print is 20.19. The stochastic is now in buy mode. RSI at 38.52 is stronger than last week's indication of 36.90. The M.A.C.D. histogram at -0.32 is higher than last week's indication of-0.44. The market pierced the 9 bar average, but failed to hold and broke back below it. A weekly close of 19.51 or lower in July Sugar will turn the weekly trend down.

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

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