The Softs Review
For the week of November 8th, 2010
Back to Softs market in the new week, let's see what Pitguru Jurgens H. Bauer has been analyzed for us!
"They say money doesn't go as far today as it used to." To that I say, "That's not true, much of it goes all the way to China"
The economic environment has prompted the Fed into action in a way that can only be expected to serve the long side of most commodities. This doesn't mean to throw caution to the wind, but the long side should be perceived as attractive and as such given strong consideration. Buy, seeking to add on dips, but remembering to kick out some on strength, looking to re-establish on dips seems the worthwhile approach. Although (as pointed out by a wise client), an exception among the soft markets may be cocoa as the majority of actual business is based more on the London market. So other than cocoa, I basically lean towards the soft complex benefiting as prices should tend to rise.
Now there are other particular bullish factors at work, such as in cotton, the bullish supply/demand story, (particularly in the case of China), combined with the shortage of available cash product among the trade, on top of the obvious shift in asset allocation in reaction to loose monetary policy now underway by the Fed. Those all ought to continue to assist advances.
Significant option expiration will come for the December coffee and cotton contracts. The net effect may serve to reduce open interest, yet whenever options expire there is the potential for gamesmanship.
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