Jurgens Bauer's Comments on the Soft Markets for Tuesday 7.15.08

Do you communicate, or even know who executes your option orders in the Soft Markets? If not, why not give me a call and explore how we might work together. I execute orders for customers in all the soft markets. I may be reached on the trading floor at 212-748-3898

Fed Chairman Bernanke commented that, "the risks to their (FOMC) forecasts (of economic growth) are skewed to the downside" and that he expects consumer spending "to be restrained over coming quarters." Producer prices were up 1.8% in June and up 9.2% from a year ago, which is more than expected. Retail sales were up .1% in June, and less than expected. The Euro was up .095 at 96.855, the highest close in over two months.  

Coffee: Harvest has picked up pace with clear weather still in the forecast. Crop shows all the signs of being big. Resistance was met early as the session turned negative with values proceeding to methodically work lower. Option volatility came in, (which is often the case with lower grinding moves), however the reaction wasn't so much due to large paper offers as much as it seemed a self fulfilling prophecy.  Look for more volatility weakness should prices work lower. A collapse doesn't seem likely and a weak dollar should provide supportive influence.

Cocoa: Positive reports on growing conditions for the fall crop in West Africa aside, the price improved on the day, opening quite strong, boosted by the weak US dollar. I cannot throw in the towel on puts just yet, but may soon as inflation and the dollar may dictate. Look for consolidation, or a break either way. Still like owning straddles.  

Sugar: After trying the upside in the morning, prices took a sizable drop. Many felt crude responsible, but regardless the direction of other outside markets did carry weight.  Reduced import duties on Brazilian ethanol rather than sugar are making the rounds. Talk in Washington is that something needs to be done (by them) to assist American drivers.  Still not sure of direction and expect Oct to remain in a range between 13 and 15 cents. So look to buy weakness, risking a close below 13.

Cotton: Divorcing itself from the grains cotton values shifted into positive gear on cash market business interest and short covering. While some friendly option strategies were executed, they didn't seem to be the fuel spurring the move up and rather in response. There is also the technical appearance of a double bottom to attract specs. Key psychological support in December at 7200 held and the close above 7350 is positive.  Continue to watch for crop developments as a key.

Orange Juice:  The Florida Department of Citrus said that there were 135.6 million gallons of frozen orange juice concentrate in inventory on July 5th, up 72% from a year ago.

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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