The Softs Review
For the week of October 31, 2011

By Jurgens H. Bauer

On Thursday the bulls came out to play. But is it a Trick? Or a Treat for Bears?

Happy Halloween! In my neck of the woods we were greeted by a major snow storm that snapped tree branches and downed power lines. Power is out in many areas. Even today the trains are not running into NY. I hear that the world population has reached 7 Billion, but it doesn't seem like many of the swelling ranks want to be long in the soft commodity complex.

Last week we saw the bulls came out to buy into the news that Europe has been officially bailed out. Those that were short the market had to cover as well so prices lifted as the dollar weakened. But there are many questions still about the deal, as details need to be be worked out before year's end. therefore remaining a skeptic is what I suggest. And from the looks of things this morning the week ahead will be arduous. So much for the rally side of things...

Predictions for the week, KCZ will trade towards 219 and maybe 211, look to sell rallies. Sugar SBV will visit 24. Cocoa prices will provide interested buyers with the dip they have been seeking, whether or not it receives enough buying results to prove that this market is indeed friendly is the bigger question. Cotton needs to hold above 100, but it likely will try and get there. The biggest factor in the mix will be the dollar. As the dollar goes, so will the markets. Now let's see about those trains...

UPDATE: Effective immediately, and until further notice, ICE Futures U.S. has determined that all customers of MF Global shall be limited to trading for liquidation only. In addition, and until further notice, the Exchange will no longer recognize MF Global or any of its divisions, including the Pioneer Division, as a guarantor for purposes of floor trading privileges. Accordingly, floor brokers and traders guaranteed by MF Global or its divisions may not access the trading floor. The foregoing actions have been taken based on circumstances regarding the financial condition of MF Global.

This news may very well lessen liquidity as there are some market makers who use these firms to clear trades.

Also it is month end and with it, shenanigans may be played. I do note the inflationary climate brewing and that pronounced weakness may offer opportunities for those seeking to work into long term friendly positions in anticipation of inflation.

***chart courtesy
Gecko Software’s Track n’ Trade Pro
Past performance is not necessarily indicative of future results.

Disclaimer: Past performance is not indicative of future results. Trading futures and options involves substantial risk of loss and is not suitable for all investors. Fundamental factors, seasonal and weather trends, daily news, and other current events may have already been factored into the markets. The use of stop loss or contingent orders may not protect profits and may not limit losses to the amount intended. Certain market conditions make it difficult or impossible to execute such orders.