Jurgens Bauer's Comments on the Soft Commodity Markets for 05.20.08
Strong Dollar Softens the Softs
Coffee: After failing an early attempt at cracking 140 in July a stronger dollar helped weaken values and prices responded by moving downward. This action now provides the appearance of a double top at 140 which could appeal to technical traders. Although it would be just like coffee to open lower and then rally, so while I seek to be prepared for some further downside activity, I also am not holding aggressive shorts, preferring instead to own puts. The fact that prices didn't really bounce leads me to expect more on the downside, however, I will cover shorts if support becomes evident early on Tuesday, as this market is still capable of another go at 139-140, especially if the dollar weakens.
Cocoa: As a long time fundamental bull I find myself now a little short and pleased. The strong dollar took cocoa for a bearish ride in swift fashion on Monday and the charts do not appear friendly suggesting that additional pressure is likely. Although the close wasn't below my key point of 2590, there still seems to be more work needed on the downside and a drop to 2550 likely. If that doesn't hold then look out below.
Sugar: As called for July did test 1134-1140, (as it reached 1133), and indeed it was worthy of scale up selling. A test of 1093 followed. However, the price movement on Monday required a dose of patience for bears, yet the reward did come with the weak close and lower post-option trading. I remain bearish and await a further drop to 1050-40 in July. Expect some trouble holding that level but also look for volume to change hands. The trend is your friend and the trend is still down in sugar. As I stated in my previous comments, "Remove the dollar and the energy markets and what do you have? I think a market with abundant supplies. Otherwise the speculation on ethanol remains." Watch for a spec puke out!
Cotton: "A kick save and a beauty," as another recovery was accomplished in cotton, and this time with out outside help. Look for July to struggle with 7245 and perhaps continue to stay in the 6950-7250 range. And while stops above 7235 are likely, I remain skeptical that July can achieve much as exports are apt to fall off as values move away from 70 cents. Patience works when owning longs, and have willingness to take profits on strength. 2,500 (or more) Z 85/95 calls spreads were bought for 210-215.
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Jurgens' Technical Support and Resistance
05.20.08
Cotton: (71.81 - 0.15)
Support: 71.35-71.20, 7050, 69.55-69.40
Resistance: 72.35-45, 7325, 7400
Coffee: (135.20 -2.80)
Support: 135-134.40, 133, 130
Resistance: 140, 142-142.50, 144, 145.20
Sugar: (10.86 -0.27)
Support: 10.50-10.40, 10.10-9.89
Resistance: 11.16-11.22, 11.59, 11.75
Cocoa: (2611 -65)
Support: 2583-2573, 2550-2535,
Resistance: 2647-2650, 2680, 2713-2721
©2008 Jurgens Bauer & Associates all rights reserved.
Trading floor: (212) 748-3898, cell: (973) 652-4694
Email me at jurgens@jurgensbauer.com DISCLAIMER: Any information and opinions contained herein comes from sources believed to be reliable, but certainly not guaranteed as to accuracy or completeness. No responsibility is assumed with respect to any statement, nor with respect to any expression of opinion herein contained. All views are the opinions of the author at the time of writing and are subject to change without notice. No statement should be construed as an offer to buy or sell a commodity. This publication is for information purposes only: Any and all trading ideas suggested are hypothetical in nature and also subject to change without notice. Commodity futures' trading is speculative by nature and investors can lose more than 100% of their account equity. DISCLAIMER
©2008 Jurgens Bauer & Associates all rights reserved
