The Softs Review
For the week of October 10, 2011
By Jurgens H. Bauer

More talk about support and recapitalization for European banks is helping spur another rally, continuing the trend from most of last week. How long can that last?

US futures are all popping. Dow futures are now up by about 145. Europe is higher across the board. Italy's FTSE MIB is up 1.2% 1.5%. France is up 0.9%. The euro is having a monster morning, shooting back above $1.35.

What's helping? A rumor about Russia bailing out Spain, strong economic data, a new promise from Germany and France that there will be a bailout plan. Ideally, something good will come of all this, but I remain a skeptic.

Was out on Friday, drove to a wedding in Maine. Weather was beautiful, drive was long..Thanks to Kevin for covering for me on the floor. Friday KCZ broke lower, which I had been expecting. Now more talk is of 217-218, and I agree. I also think there could be more 213 and maybe even a trip below 200. So looking for short opportunities in KCZ on rallies. Risk a close over...Premium Subscribers get all the details in Daily Commentary Emails and Trade Alerts! Option expiry on Friday for cotton and coffee. This morning KCZ is up, along with all the softs. Dollar is down quite a bit and that seems to be the reason.

I still hold out that Cotton could muster a rally even with other outside markets negative, but much will hinge not directly on the crop report as much as the expectations in the market already regarding the crop numbers. Right now I think given a bullish number, prices can rally. Given a neutral number, or a bearish number and prices slip below $1.00.

Cocoa and Sugar are able to go either way. I think sugar will carve out a range. Cocoa is looking oversold and apt to experience short covering rallies, yet the currency markets will have a lot to say about the potential duration of any movement. For now still advise the short side as a better approach.

This should be an interesting week.