It is possible that since cocoa is a want to have, rather than a have to have, that the slowing economy could start to cut into the demand for cocoa in Europe and North America. The thing to remember is the growing demand side in China and India. Their recent induction of the wealthy middle class into the demand base shouldn't be forgotten. Like the editorials about automobiles, slackening demand in the western world could easily be picked up by Asian nations.

Coffee has also fared poorly during the onset of the Brazilian harvest. We aren't out of the woods yet on supply and if they are being overly optimistic on harvest estimates, we will see this market move quickly to the upside. This week though, action will probably be erratic and mimic the other commodity markets in sensitivity to the US dollar. Sugar will likely remain sympathetic to the energies sector redeemed only by the ongoing questions regarding quality and quantity of sugar crops in India and Pakistan.

Orange juice will be the big mover and shaker as two tropical storms make their appearance. This is the time of year that brings the bulls as anticipation builds that the Florida citrus groves will not make it through hurricane season unscathed. It goes without saying that any reaction is premature. Neither of the storms is an immediate threat and the worst the closest one will do is bring beneficial rainfall to the recently parched peninsula state. Orange juice remains a short opportunity waiting to happen.

Cotton remains as active as drying paint, moving sideways as investors and sightseers wait and see what will happen in the coming months. Stagnant it may be, but this market has shortfall written all over it. At the risk of being redundant, the US is not the only country shifting acreage away from this vital fiber. Throw in more than a few environmentally sensitive people who shy away from manmade fibers and cotton has as much potential as any crop to creep to new highs.

 

*Chart Courtesy of Gecko Software’s Track n’ Trade Pro

The Metals Pit Review: By PitGuru Frank Martin

All precious metals took a hit last week while investors decided they didn’t need to stay in the hedge. This week will see some investors return to the haven of gold and silver. The concerns about how deep and how long the US slowdown will be are keeping investors looking for alternatives.  There is still a lot of uneasiness – especially with recent scares over banks – and this should keep gold and silver well supported. Mix in higher crude oil with geopolitical tensions and we will see gold stay above $960.

Platinum and palladium were harder hit last week with as fears continue that demand for vehicles will fall off dramatically. Consumer demand will be the thing that weighs down these markets on any dollar strength. There is also a growing feeling that South Africa is getting a handle on its energy issues and mining interruptions. Both of these markets will be flat to lower and will need more of a push than gold or silver to turn back. Premium subscribers check for this incredible trading opportunity in my instant messenger alerts this week!

Copper fell on the outlook for China then turned higher as news came out of Peru that miners are going to strike again starting today. Chinese demand needs to remain high to sustain current prices and so far this year, it hasn’t. Mining strikes don’t last forever and follow through will be needed to truly impact production.