The Softs Review
For the week of May 23rd, 2011
We are going to continue the story on soft market with Pitguru Jurgens H. Bauer. Just see how Sugar, Coffee, Cocoa are going to be traded at.
For this coming week I say pay attention to the direction of the dollar as it will likely offer a key for the Softs. Obviously, the flow of funds these days is too frequently subject to the short term swings in the 24 hour news cycle. What is interesting is that the US Dollar Index had rallied during Friday's session to close right on the downtrend line.
So far today the dollar is up significantly and the pressure, while not severe, is weighing on commodity values. If the dollar continues to show strength will commodities learn to accept it? I think traders all know that should it drop, then expect commodity prices to advance. If it strengthens the markets ought to face pressure. However if it stabilizes, then what? Well, in that case markets may tend to stabilize as well, and try to focus upon their own fundamentals instead of trading in sympathy with the dollar. As I see it, a key element will be real demand for the actual soft commodities, not just the investor demand.
In sugar the trend may still be downward, but the recent action has impressed. If SBN can improve above last week's highs, (I think a close over 2265 is needed), then market will likely try to turn bullish. If instead it fails, then a retest of 2150-2135 is likely. Neutral to friendly as it reacts to the dollar strength this morning.
Coffee prices have recently come down quite a bit. The trend is down, but conditions seem oversold and support should be found …Premium subscribers check for details in the Daily Comments. Dollar strength so far has not pressured values too much, but any recovery efforts will need to rise before attracting longs. Should values drop below 250 this week, then perhaps the bull market in coffee is over.
Cocoa prices fell below.....
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