Jurgens Bauer's Comments on the Soft Markets for Wednesday 09.03.08

After the three day Labor Day weekend, while the dollar was stronger, the real driver was the sharply lower oil prices. Apparently Gustav didn't do the damage to the oil rigs in the gulf that many had thought possible. Gustav will however provide rains in the delta onto a cotton crop that won't benefit, but that's another story.

CTZ: Dec began the day in a hole and finished on the plus side. The turn around was impressive because it occurred amidst lower grain prices and decent volume, but remember that with US markets having been closed, some of that volume was catch up. The reason for the turn was attributed to Gustav (and friends), as forecasters are predicting drenching rains and excessive precipitation for the Southeast and Delta regions. West Texas is another story, that region could use the rain.

Yet even with today's strength amidst a red board, many analysts continue to call for a range, I concur. Without demand this market isn't apt to make significant progress. Besides Chinese prices were again lower and that tells a tale. The downside is probably limited to 65-63 cents, so selling puts underneath makes sense. Spec/hedge is showing an increase of 2.9% from last week net long 0.7%.

CCZ: Cocoa prices fell hard. I said last week that this may just be the beginning. Well, 2641 was the low in Dec today and a close below 2620-00 could spring another wave of bearish action. I continue to suggest that owning puts is prudent. Owning straddles is even better as it allows the flexibility of scalping your gamma. This market has been a fund favorite and if they sell prices will head south. A short covering rally may be in the cards, but don't look for much other than a selling opportunity to develop.

KCZ: Coffee prices dropped to an interesting low of 141.80 and held. Word was circulating that roasters were aggressive buyers, but that is obviously difficult to confirm with the anonymity present in electronic trading. The retreat took place while concern was brewing that damage to coffee warehouses in N'awlins. Yet, from what information I gather the levees experienced only localized flooding and likely there was no serious damage.

SBV: Now here's a market that held up quite well. Perhaps the downside play is ending. Traders suspect commercial buying may have played a roll as values recovered. October isn't the month to look at on the long side, but rather consider March. The spread between them widened, which often suggests too much sugar available, and volume was more active.

Orange juice: Storms to the left of me, tempests to the right...however nothing yet headed in the direction of Florida's citrus groves. Regardless, this remains a weather market and sooner or later with the hurricane season in full swing one of them is bound to attract another run up in price. But since that wasn't true today, the specs dumped and went home.

If you're looking for a floor broker interested in working your orders, call me.

©2008 Jurgens Bauer & Associates all rights reserved.
Trading floor: (212) 748-3898, cell: (973) 652-4694, 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