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Soft Commodity Comments for 04.23.08
Softs Took Back Monday's Declines on Weak Dollar
Activity in the soft markets was dull andoption activity quiet. Prices livened up only whenthe dollar again showed further weakness. As thedollar can't hold and continues to make lows, thesoft markets will react in response. Grantednumerous eyes were focused on developments on theCFTC round table discussion and not aggressive inthe markets. The major issue seems to be what, ifanything, regulators might do regarding indexfunds. From what little I saw, (viewing thewebcast) it looked like managed money was receivedwarmly and treated with deference, but having notbeen there myself I'd like to obtain additionalfeedback. If any of you have any comments, pleasesend them along.With not much to say (and my oldest son visiting) tonight's comments are brief. Cocoa: Today's up move was based on the weak dollar. Cocoa will rise as long as Funds show interest and the dollar remains weak. Cotton: Cotton had been beaten up and used the session to reclaim yesterday's losses, with no real feature. Chinese prices are low and my sources suggest that means supplies are adequate. I can give you no reason to buy, and even while I anticipate heavy deliveries I do not expect a melt down since open interest has been substantially reduced as we head into FND on Thursday. Coffee: It seems as if attempts at range building are at work. The weak dollar may have helped generate some short covering as prices took back essentially what they had lost the prior day. Merrill Lynch stopped most of the 1,629 notices issued. Sugar: Market responded in kind to the softer dollar and stronger oil. The recovery is not to be trusted and owning puts seems a good approach. Technical Support and Resistance Levels for 04.21.08
July Sugar: (1295 +36):
Support 1246-1234, 1210-1200
Resistance: 1310-1315, 1350-1355
July Cocoa: (2751 +81),
Support: 2560-2540, 2522-2517, 2484-2482
Resistance: 2770, 2839-2856
July Coffee: (136.70 +3.10):
Support: 132.80-132.50, 128.80
Resistance: 138.60-139.05
JulyCotton: (74.75 +1.40)
Support: 7310, 7275-7260, 71.80-7160, 7000,
Resistance: 7510-7520, 7570, 7640-7675