A delayed reaction to Friday's news regarding a projected fall in cocoa demand could bring selling pressure to begin this week, but that is unlikely to last. The latest ICCO prediction that cocoa consumption will slip amid economic slowdown should be quickly pushed aside. The US dollar faces the likelihood of slumping southwards in the hotbed of restructuring and attempts to salvage large investment banks and as it succumbs to the same weakness that has plagued it all year, commodities have the chance to turn higher.
Coffee will have the same opportunity but mixed in with the latest news that consumption for this year has approached 128 million bags - the same magic number which was the final production count last year. This market's latest dip in price will be short lived. As investors fled to the haven of precious metals amid the chaotic trading last week, they will return, and when they do, coffee will make a strong rebound.
Sugar, on the other hand, will likely bounce around in its current range as the recent sell off in energy caps the potential gains in this market. Even the suggested news that production has fallen failed to give sugar any kind of buoyancy above 12 cents, orange juice also lacks real staying power at higher levels. It will make another run towards 95.00 as a knee jerk reaction to the winding down of hurricane season in the Florida peninsula, but there is nothing keeping juice at those levels beyond pure sentiment. Heavy rainfall at home and abroad will likely prove to have taken a toll on global cotton crops. No less than two soaking and damaging storms hit the southern US and its cotton fields and monsoon rains in India are drowning fields. Until flood waters recede and damage assessments can be made, there are opportunities to enter this market. Premium subscribers check for this incredible trading opportunity in my instant messenger alerts this week!
*Chart Courtesy of Gecko Software’s Track n’ Trade Pro
The Metals Pit Review: By PitGuru Frank Martin
There are few words to use to describe last week's trading. The stock market losses brought gold buyers and momentum delivered a huge rebound. It didn't last and the bailout plan from the government sent longs packing. Gold had a large decline but this week it should move higher again. Investors still doubt that things are settled. The fewer people that feel comfortable with the plan, the more people will look at precious metals again. The bad bank investments have not gone away, they are just getting shuffled around. Gold should be back about $900 in no time. Silver had modest gains but will also move higher this week as gold does.
Platinum and palladium are stuck below their latest resistance and the global credit crunch should keep them there. Even though investors and funds are looking at metals to hedge their stock market losses, the chance the slowdown has really eaten into auto sales will keep pressure on these markets. Copper should also stay in its recent range around 3.20. The US dollar will continue to impact all three of these markets, but the fundamental weakness from global slowdown will keep prices flat to down.
*Chart Courtesy of Gecko Software’s Track n’ Trade Pro
The Grains Pit Review: By PitGuru Matthew Pierce
Stagflation and Agricultural markets: Stagflation occurs in two ways; first, central banks pump excess cash into the system looking to increase spending, promoting inflation.
