Traders Sour on O.J. Futures!
Orange Juice futures closed sharply lower this afternoon, after a private analyst came out with a larger-than-expected estimate for the 2007-08 Florida Orange crop. Citrus consultant Elizabeth Steger projected the Florida Orange crop at 198 million 90-pound boxes – well above the expected range of between 160 and 180 million boxes. In contrast, this year's crop came in at nearly 129 million boxes. The most active September contract briefly traded down the 10-cent limit after rumors of the estimate hit the ring in the last 30 minutes of the day session. Contract lows at 118.90 continue to be support for September O.J., while resistance is found at the 50-day moving average currently at 134.70. September Orange Juice closed at 122.00, down 9.70.
Though only recently becoming an official named storm, Tropical Storm Erin is already catching the attention of Cotton traders, as traders fear potential flooding and crop damage as the storm nears the Texas coast. At 10:30 AM Chicago time, Erin was located 250 miles east of Brownsville Texas, moving west-northwest at 12 mph according to the National Hurricane Center. Erin is currently expected to make landfall near the lower or middle Texas coast in the next 48 hours. Any damage to the Cotton crop would be supportive to new-crop Cotton futures, as the USDA is estimating US ending stocks to fall to 5.80 million bales versus 9.7 million bales this past season. However, concerns that U.S. Cotton exports will not meet USDA estimates are keeping any rally attempts in check. Technically, December Cotton remains range-bound between two widely watched moving averages, with support seen at the 100-day moving average at 5928, and resistance found at the 50-day moving average of 6260. December Cotton closed at 6018, down 36.
Mike Zarembski, Senior Commodity Analyst
