Livestock: Live cattle is still pushing lower as the demand is just not there. The price has gotten cheap, but there is no clear sign of a turnaround yet. Lean hogs probably got too cheap a couple months ago. I would expect more consolidation in this area and possibly some weakness in the next couple weeks.
Energies: Crude oil managed to hold north of the $70 level, but I don’t think the performance of this market was very encouraging. The markets were worried about the fate of the dollar as rumors circulated that OPEC may replace the dollar as their pricing currency. Gold had a blistering rally last week, but crude closed below $72.
There is still a large overhang of supply in this market and it should not rally based on the current fundamentals. The stock market is certainly looking far ahead and crude could do the same. For now, crude is stuck in a range from the mid-60s to the mid-70s. The logical trade is to sell the high end and buy the low end until it breaks out.
Softs: As always, these markets are wild and sometimes crazy. Sugar tried to make another run at the highs, but had an abrupt turn to the downside. The fundamentals are still strong, but price action can go either way. Cocoa continues to trend higher, but leveled out on Friday as the dollar rose. Orange juice exploded higher and it will be interesting to see what type of rally it will have. Lumber is interesting as it keeps trending lower. That makes for a questionable housing or economic recovery.
Metals: Gold has made an amazing rally from its lows around $250 many years ago and may be in breakaway mode now. It wrote some time ago that gold could be the next bubble market. I feel we are no where near a bubble yet. There has yet to be a buying frenzy and I believe prices need to be north of $2,000 before that would happen. For now, the trend is in tact and the outlook is good. The fundamentals are setup for a continued rally for several years.
