The Softs Pit Review
For the week of August 2nd, 2010
Check out notes by our expert - PitGuru Jurgens H. Bauer - to guess what will be going on in soft market in this week! Note down the necessary information! Hope you will have a profitable trading week!
"During the past week both coffee and sugar led the way up and showed leading strength in the soft complex. Cotton too was up over 3 cents, with more than half of that gain taking place on Friday. All in all it was an impressive and positive week for the soft complex, but are prices reacting to industry fundamentals? Or is the flow of spec and fund money the major force at work? Better yet, does it matter?
If you take a look, already this month, in the first few hours of trading KCU has moved from 174.85 up to 181.50 and back down to 176.70. That's quite a move both up and down. My advice? Get used to volatility and be prepared. Coffee still looks like it has potential for additional gains, the big question being can it? Likely there is a reluctance to be aggressively short, but a correction is possible and healthy. My technical objective has been the 182.50 level, and that could be reached soon, but there is also the potential for an even higher move, say 208.00 .Support should be found initially at the 175 area, then at 170-168.50. Harvest is uncovering problems that are being noticed, chief among them quality issues, yet the crop size is big.
Sugar, which had a huge run up last year, is not expected to match that move, but the market has produced solid gains and is now forming a new higher trading range. 20 cents is the first target, then the market will have to see, but don't rule out tests for support.
Cotton prices have benefited from the tightness in the supply pipeline as demand has returned, but even there the market has seen the recent move up the result of short covering more than industry hedges. Are specs now preparing to get long? It appears so.
I feel that this week will allow some chances for the testing of support in the leaders among the complex, but with outside markets also positive, perhaps additional gains are in the mix." |
