SPOT COM
GOLD
In late-2010, gold prices trended higher, helped by a multitude of
economic concerns in Europe and the U.S. and by high expectations that
the Federal Reserve would expand its balance sheet (which it did). Gold has
shown two-way trading since October 19th and changes are taking place. The U.S. economy appears to be improving, Europe is
surviving its debt scares (so far), and China continues to take steps to
restrain its economy. April gold posted a lower high on January 3rd and prices
have been holding below the 15-day average since January 4th. On January 14th,
prices posted their lowest close in seven weeks - an impressive sign of
weakness (updated 1-14). We expected more selling from gold lately, but prices
have been fairly calm. We have to say that this still "feels" like
two-sided trading. This dip below the 15-day average may have support (updated
1-21). On January 27th, April gold closed at its lowest in four months - an
obvious sign of weakness. The next challenge is the 200-day average (updated
1-27). Gold jumped higher yesterday with concerns about Egypt. Overall,
if prices can hold above the 200-day average, there may be another good buying
opportunity ahead, but we do not see it yet (updated 1-29). The higher close on
February 3rd is a nice sign of strength (updated 2-3).
COPPER
Earlier this summer, copper prices were hurt by concerns about a
slowing world economy, but bounced back with evidence that Asia
was still going strong. On November 16th, prices broke sharply below the 15-day
average, pressured by concerns about China
and Europe. However, the higher close on
December 1st along with several positive manufacturing reports was an
impressive sign of new strength (updated 12-1). We may be early and We know that all the analysts are bullish, but $4.20 is a
nice price to take for copper - standing back for now (updated 12-14). The
rally continues and
that is OK. The fundamental outlook is very strong, but it is fair to be
concerned about this high price level. . . Copper prices continue to show a
positive imbalance and the higher move on January 28th is a nice sign of fresh
strength. Support at $4.20? (updated 1-28). Its been another nice run. Glad to step back and watch
(updated 2-7).
SILVER
Silver was chopping roughly sideways from early-April until August
25th when prices closed at their highest in eight weeks - a key sign of
strength. The drive to buy silver has been strong since then, supported by
continued growth in Asia, an accommodative monetary policy in the U.S., and debt problems in Europe.
We have avoided silver since November 18th because prices were so high. Of
course, it would have been nice to ride the trend higher, but we are content to
be out - still watching (updated 12-14). Prices continue to show a strong
positive imbalance, but are things changing? (updated
1-12). Is there support around $28? (updated 1-14). On
January 20th, silver posted its lowest close in seven weeks - an impressive
sign of weakness (updated 1-20). We hate to vacillate so much, but we are suspicious
that prices are showing two-sided trading and this dip below the 15-day average
is, at least, a short-term buying opportunity (updated 1-21). Bad call - standing back. Part of the confusion here is
that, in the big picture, there may still be good reasons for owning silver,
but the current weakness is lasting longer than expected (updated 1-27). Prices
had a big reversal on Friday and are holding above the 15-day average, so far -
a possible sign of strength (updated 2-2).
COCOA
Cocoa prices spent most of 2010 below the 200-day average and were
in a balanced trading pattern from mid-September until December 6th when prices
jumped up to their highest close in four months - a sign of strength. The new
high on December 6th is a little suspicious since it was prompted by political
problems in the Ivory Coast,
but it still deserves respect (updated 12-6). Cocoa prices are holding above
the 200-day average and that is impressive, but We
still don't like the potential risk that comes from the tense political
situation - glad to stand back (updated 1-1). The sell-off on January 4th does
not look good. It leaves behind a lower high and a failed attempt to trade
above the 200-day average - serious signs of weakness. Having said that, the
political problems in the Ivory
Coast make the risk of being short much more
dangerous than normal - Who needs the grief? Staying away
(updated 1-4). On January 14th, prices closed back above the 200-day
average with increased bloodshed in the Ivory Coast - still staying away (updated
1-14).
COFFEE
On June 11, 2010, coffee prices jumped significantly higher and
have been making a series of higher highs and lows ever since. At first, Brazil's coffee
crop in 2010 was supposed to be big enough to keep a lid on prices, but the market
gradually realized that coffee supplies were going to be tight anyway. became
In the past twelve years, spot coffee prices traded above $1.50 only twice and
here they are again, trending higher with concerns about tight world supplies.
. . Prices were in a range between $2.00 and $2.20, but broke above that on
December 17th - the strength continues (updated 12-17). Prices have had another
nice surge - a good time to stand back (updated 12-30). The dip below the
15-day average in early-January did not last long - the positive imbalance
continues (updated 1-12). Possible support at $2.30? (updated 1-18). Higher close on January 28th is fresh
strength - how high is coffee going to go? (updated
1-28).
SUGAR
Sugar prices had a big run-up in 2009 with concerns about tight
supplies. The rally lasted until late-January of 2010, but then prices dropped
sharply to the surprise of many. After hitting a low in early-May of 2010,
sugar prices began climbing again with concerns about tight world supplies.
Currently, sugar is a high anxiety situation. Supplies are still said to be
tight, prices continue to show a positive imbalance, but those prices are also
at 30-year highs - be careful. . . Possible support at 30
cents? (updated 1-18). The higher close on
January 21st is an impressive sign of fresh strength (updated 1-21). Content to
let go and watch, for now (updated 1-29). We changed our mind with today's dip
- the higher closes on January 21st and 26th are too impressive to ignore
(updated 1-31). The sell-off on February 3rd after Cyclone Yasi
is too big to ignore - standing back (updated 2-3). After failing to hold the
new high, March sugar broke to a new low on February 8th - a sign of weakness
(updated 2-8).
SOYBEAN
Soybeans first began climbing higher last July with help from Russia's wheat drought, but then took on a new
strength after September 17th when talk of dry weather in Brazil sent
prices to their highest close in nearly two years. Prices have shown a strong
positive imbalance since then, helped by USDA expectations for extremely low
ending stocks in 2010-2011. Prices went higher again after the USDA's January
12th report, but there wasn't much follow-through. Today's lower close may
indicate that its time for at least a pause - standing back (updated 1-25).
Prices were not able to stay under the 15-day average for very long which means
that they are still well-supported (updated 1-31).
WHEAT
Wheat prices had a great summer in 2010, thanks to Russia's
drought and other weather problems. Even though, world supplies of wheat are
currently comfortable, some of those weather problems are continuing in 2011
and tight supplies of corn and soybeans are also supporting wheat prices. On
January 3rd, March wheat posted its highest close in nearly five months, supported
by flooding in Australia and
dry conditions in the U.S.
- an impressive sign of strength (updated 1-3). This is looking like two-sided
trade with a positive bias - there should be support for dips below the 15-day
average (updated 1-14). The higher close on January 18th is a nice sign of
strength (updated 1-18). That was good move - time to stand back again (updated
1-25).
CORN
From April through July, corn was a nice example of a balanced
market with two-sided trading. The story on Russia's wheat drought broke on
July 6th. Corn set a higher low on July 27th and has traded higher since. The
up-trend was interrupted by a bearish grain stocks report on September 30th,
but reinstated after a bullish USDA estimate on October 8th - the lowest U.S. ending
stocks to use ratio in 15 years. Corn supplies are extremely tight and the
prices have been climbing, but are at a high level. The narrow trading range of
the past two weeks makes us suspicious that prices may be due for a pause -
standing back (updated 1-29). That was a mistake - prices are still
well-supported (updated 1-31).
COTTON
On June 30th, the USDA estimated a 19% increase in 2010 cotton
plantings, more than was expected, and prices broke lower. That may have been
the last bearish news that cotton received in 2010. On August 12th, prices
exploded higher after the USDA estimated that the 2011 U.S. ending
stocks to ratio will fall its lowest level in 15 years - that was serious
strength. On October 19th, We advised getting out with
cotton at its highest spot prices in 15 years. Obviously, that was too early,
but overall, We do not regret staying away from
high-anxiety situations. . . This is too volatile - still staying away (updated
12-3). Prices continue to trend higher. Cotton supplies are still considered to
be tight and demand is said to be strong, but be careful - these perceptions
can change without warning - content to watch (updated 1-29).
LIVE CATTLE
Cattle prices have put in a steady string of higher highs and lows
since last summer, in spite of numerous concerns about the economy. Cattle
numbers have been restrained, beef exports have been strong, and the cheap
dollar versus the expensive Australian dollar doesn't hurt. The sell-off on
December 7th made us wonder if prices were getting too high, but the new high
on December 22nd dis-proved that - prices are still
strong (updated 12-22). With prices below the 15-day average, its always hard to know if trouble is starting, but so far,
prices appear well-supported (updated 1-25). This looks like a good time to
step out and watch. All the news is so favorable for cattle prices right now
and they are near the January 18th high (updated 2-2). The lower close on
February 7th leaves behind a lower high and is a sign of weakness (updated
2-7).
CRUDE OIL
Crude oil prices were restrained in the second half of 2010 by
concerns about Europe's debt levels and the U.S. economy. Prices showed two
nice signs of strength on September 29 and on November 1st after emerging from
narrow ranges. The bounce back from below the 200-day average on November 24th
and the higher close on December 1st with several positive news reports were
also good signs of strength (updated 12-3). Overall, the world economy appears
to be improving and crude oil prices still show positive imbalance - these dips
below the 15-day average should be good buying opportunities (updated 1-6). Is
it (March) stalling at $93? (updated 1-18). Today's
lower close presents another good chance to buy below the 15-day average
(updated 1-20). That was a bad call as there is more weakness here than
expected - standing back (updated 1-25). The big surge in prices higher due to
concerns about Egypt
is impressive, but too volatile to jump in - just watching (updated 1-31).
April crude oil prices are still showing a positive imbalance and should have
support around $88 (updated 2-4). The lower close on February 7th signals a
pause, at least. It looks like more two-sided trading, for now (updated 2-7).
