Jurgens Bauer's Comments on the Soft Commodity Markets for 06.06.08
Coffee: Once again expecting a press on the downside traders were caught (short) by surprise when instead July ran higher. The move, (or surge), supposedly had its origins in a weather report forecasting cooler temperatures in the Brazilian groves. Short covering and new buying set the wheels in motion and prices took off as option volatility got pumped and July moved above 135, straight to 137.25.
The report responsible for fueling today's sharp rally calls for cooler temperatures two weeks from now and (as I understand it) is only based from one of several models. Now while one must always respect the market, today's action leaves me suspect and wondering if this is a set up for another return trip to the low end of the range. Coffee is notorious for shaking the tree before making a big move and there are a lot of long term bulls holding positions. Regardless, the coffee market has been acting very unsettled of late bouncing back and forth. Sure those playing the range have been successful, but those preparing for a breakout certainly haven't.
I suggest that as long as the range remains in tact...yet, I continue to seek a trip down to the lows even though we had the type of move (above 135.25) that should serve to chase me off the bear side. So like many others I'm sure I have little confidence in either direction. As a skeptic I need to see more on the upside to scare me into longs.
Cocoa: As option expiration approaches we're always apt to see action such as we saw today. July half-heartedly tried to advance, but volume was light and indicative of no serious leadership, so when it couldn't advance eventually the downside was pressed and liquidating stops proved vulnerable. Of course prices then held after penetrating 2740, only to recover and end the day just about unchanged.
As I've been saying it may take a few days, but decision time is coming regarding a move outside the 2740-50 to 2820 range. Closing as well as it did after having been under the gun is impressive, but July still needs to poke its head above 2825, and maybe 2850 in order to show signs of new life for longs. Tomorrow's expiration will be interesting. It may take a few days longer to move above 2825, but should July break below 2750 things could get crazy. I'll lean bearish should 2750 get taken out.
Sugar: Spreads are the real movers, although July posted a sizable run up on short covering, at least for a while, only to fall back hard. I'm on the sidelines looking in, but still don't like the prospects for July, or October for that matter and selling rallies like today seem appropriate. I also might consider March and May, but from the long side. Yet, for now I'd rather be content, be patient and wait to see what develops. Should July muster a move above 1030 I'd have to take notice, until then patience is probably the best approach using strength to establish shorts. Let the roll continue.
Cotton: Sources have been suggesting to me that much business has been getting done. The N/Z spread narrowing indicates that. Starting out the day up 100 was impressive, but it turned out those were the highs. Solid export numbers are still well behind USDA projections. The sell off had values on the ropes again, but a "kick save, and a beauty" saw July work its way back to the plus column. I continue to consider the long side of cotton as a play. Be patient and look for a bigger drop as specs go from long to short.
©2008 Jurgens Bauer & Associates all rights reserved.
Trading floor: (212) 748-3898, cell: (973) 652-4694
The July futures contract is used in the following analysis, however if you require information on other contract months call me at 212-748-3898.
Jurgens' Technical Support and Resistance
06.06.08
Cotton: (64.65 +0.33)
Support: 63.60, 63.30, 62.85, 62-60
Resistance: 65.45, 66.30-66.55,
Coffee: (135.80 +3.05)
Support: 135.25-134.70, 131.35, 130-129.60,
Resistance: 137.50-138*, 140
Sugar: (9.56 +0.04)
Support: 9.40, 9.08-8.90
Resistance: 9.75-9.84, 9.98, 10.28, 10.46-10.58,
Cocoa: (2792 -4)
Support: 2770-2750, 2725, 2682-2650
Resistance: 2799, 2825, 2873-2915
©2008 Jurgens Bauer & Associates all rights reserved.
Trading floor: (212) 748-3898, cell: (973) 652-4694
Visit my website, Jurgensbauer.com
or Email me at jurgensb@gmail.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
