The United States has over 80 billion barrels of oil in reserves which is far greater than any other country. Why all of the hype over 2% of the world’s oil. I understand that the Suez Canal and Africa play a large part in future oil production but we have oil. Now, if Saudi Arabia suffers the same fate as Egypt and Libya than we should worry. The King of Saudi Arabia may start selling more oil to pay for his new plan to help create new jobs and stimulate his country’s economy. The King is wise to do this plan because people in these countries have been known to use physical force and little to no diplomacy. Is this a just a reason to raise oil prices?

Cotton is insane…..I’ve lost my voice and that hasn’t helped, but lately, I cannot help but feel that all I am is a freaking quote machine, as constantly people want to know “where is it?” but few transact…Cannot blame them, cotton is insane….and during such times, you cannot obtain worthwhile information from computer screens…go figure.

Cocoa rallied, still think there is room on the upside. Yes, should Mr. G leave prices will likely react negatively as traders feel the situation will have calmed, but so far that ain’t happening….

Coffee failed to hold on to early gains and may spend some time moving sideways to lower testing support.

Sugar, not sure where it’s headed, but I expect big ranges.

http://www.washingtonpost.com/wp-dyn/content/article/2011/02/23/AR2011022301075.html

http://www.ft.com/cms/s/0/e09be10a-3ec2-11e0-834e-00144feabdc0.html?ftcamp=rss#axzz1EmBJOkrC

I thought this article right on target. “Doing the Madison Mis-step.”

http://www.americanthinker.com/2011/02/doin_the_madison_misstep.html

- Jurgens Bauer, Softs Guru

Iran is just trying to cause more drama by sending war ships into the Suez Canal. I guess sending a bomb that way wouldn’t be productive but it would send a message. It seems as though the bulls still reign sovereign over the stock market. Inflation seems to not concern anyone in the Federal Reserve but consumers are the ones that will feel the pinch. Jeans and T-shirts will supposedly rise 20% as well as most clothing apparel made from cotton. I think the 40% ownership sold of the NYSE is a horrible move because it seems as though America will be run by everyone else but America.  I am all for free enterprise and capitalism but certain symbols should stay here. Considering it is at a discount when bought by euros. What do you think?

Here are the WASDE report figures for February 9, 2011

Good Morning: Yesterday the market saw a wild session with better than expected early strength reversed due to the pounding in crude, cotton and sugar. The latter two was due to reports from ICE stating they will curb long speculation. The report says Cotton is limited to long 300 contracts without proving “need”. No further information as to what justifies need but I’d imagine they are pushing funds out. This is not a good idea…sounds a lot like what China did with their bean oil markets. I thought we had a free market over here? Outside of that impact the trade was a mess with crude chopping wildly as well. Limited fresh fundamental news and limited participation due to Chinese new year left many searching for answers. Bull spreads won on a down day pointing to further bullish momentum in the future. KC held ground against CHI but Minni lost due to strong late covering seen in Chicago. Look for both to widen again next week maintaining the pattern.

In options the market saw two-sided activity with many positions in March closed or rolled forward. Theta is a major issue for March length heading into the weekend. Expiration is on 2/18.

Fundamentals were quiet as the market waits for damage assessments from Australia and the US HRW plains. Argentine weather is wet but no totals are expected until Monday though talk has smaller totals than previously thought with only .25-.75″ The overnight session was choppy with light volume traded. No fresh news offers little to trade on today.

Macros are moderately mixed offering little momentum but with OI gaining every day I have to look at the upside as the risk. A drying forecast in Arg over the next 20 days, a report stating China will need to import 9-11 MMT of corn and declining HRW conditions support bulls. Charts are supportive as well in spite of indicators moving to the top end of the range. Overall heading into the weekend look for a choppy directionless trade with many eyes on Cotton, sugar, crude, the USD and regulatory bodies for talk of curbing speculation.

Beans are called Mixed again to start with the contract high at 1452.50 still within reach if the market gets bulled up today. Corn is called Mixed to start following a failure to get above the contract high at 674.50 yesterday. Indicators are showing signs of weakness at the upper end of the range. Wheat is called Mixed looking to hold ground after yesterday’s new contract high at 872 ¾. Indicators are mixed at the upper end of the range. Meal is called 1-2 dollars cheaper to open with Bean oil looking to open flat.

Matt Pierce is receiving updates to the news article posted earlier. See his Twitter feed for updated information as he receives it.

Matt Pierce shares this article on projections for Chinese imports of US corn:

CHICAGO, Feb 3 (Reuters) - Following its first large

purchase of U.S. corn in more than four years in 2010, China

may need to import as much as 9 million tonnes of corn this

year, an official with the U.S. Grains Council said on

Thursday.

“Estimates given to us were that China is short 10-15

million tonnes (394 million to 591 million bushels) in stocks

and will need to purchase corn this year,” USGC chairman Terry

Vinduska said in a statement.

“We learned the government normally keeps stocks at 30

percent but they are currently a little over 5 percent, which

may lead to imports of 3-9 million tons (118-354 million

bushels),” Vinduska said.

The U.S. Department of Agriculture has projected that China

will import 1 million tonnes of corn in the 2010/11 marketing

year ending Aug. 31, but many private forecasts are

considerably higher.

China’s 2009 corn harvest was reduced by a drought, and the

country’s demand for animal feed has been booming.

While in China last week, officials from the Grains Council

and the National Corn Growers Association met with analysts and

industry experts who said corn demand in China remains strong

because of an economy growing at 8 to 10 percent annually.

The group also discussed China’s anti-dumping investigation

against imports of U.S. distiller’s dried grains (DDGS).

“We found that importers would like to more than double the

3 million tons of U.S. DDGs (that) China imported last year,

eventually reaching 10 million tons in annual imports,”

Vinduska said.

“However,” he said, “they recognize the tremendous growth

shown in 2010 may need to slow down to allow internal markets

to adjust. One way to slow the growth was to launch the

anti-dumping case.”

As cotton reaches historic highs, Matt Pierce shares this news update on proposed purchase restrictions:

NEW YORK (Dow Jones)–Intercontinental Exchange Inc. (ICE) is proposing restrictions on large purchases of cotton, as prices for the fiber whiz past historic highs, spelling trouble for mills and apparel producers.
Cotton prices for March delivery Thursday hit $1.8122 a pound, a post-Civil War high.
In a notice this week, the exchange, which oversees the U.S.’s largest soft commodities trade, proposed requiring market participants to prove it was “economically appropriate” if they want to buy or sell more than 300 contracts, or 30,000 bales of cotton.
The move is thought to limit speculative trading, on which some of the market’s volatility is blamed.
The proposed measure, a rare intervention in the cotton market, is subject to approval by the exchange committee.
Also this week, the exchange said it was proposing increasing daily trading limits for the cotton contract, scaled according to its price. That measure requires the approval of the Commodity Futures Trading Commission.
-By Leslie Josephs; Dow Jones Newswires

The market seems resilient even after protests became violent today. The S&P and DOW are still at support levels and have dug their heals in. There is a concern that bad winter weather and the cyclone in Australia could be hurt the supply of sugar and other commodities. Many mines have been closed due to the category 5 cyclone. Job data will be released Friday which could hopefully give us a real direction. Choppy trading is all about timing but a real bull or bear market is what we are looking for.

CME opening delayed until 10:00 AM CST

Morning calls are moderately higher across the board with corn and beans setting new contract highs overnight. Wheat is just off its Aug 6th high. No early help from macros but the market does not need them to rally today. Crude palm was higher overnight due to flooding concern in Indonesia and Malaysia. Couple this with a cyclone hitting Australian sugar cane production and we have enough support from softs. Rising tensions in Egypt will likely pop prices in crude with the growing political crisis in Jordan talked about heavily. Both factors should help commodities as a whole as money runs out of equities looking for a “safe” haven.

The strike appears to be over in Argentina for a 15-day period while formal negotiations occur between government reps and port and farm workers. Major issues are wages and export tariffs. Weather in Argentina remains wet for the rest of this week offering bearish momentum but excessive rains in northern Brazil offer a bullish impact. No changes to crop expectations today.

I think overall the market should rally in a light volume session. Market participation will be limited during snowmageddon! Chicago is not out of the woods yet with one more layer of snow expected over the next 6 hours. I believe the upside remains the path of least resistance no matter what happens with any USD rally today. Retain a bullish bias heading into the first half of Feb.