?Sell Mortimer Sell!?
Today’s Spotlight Market
The Orange Juice futures market is currently in a battle between large speculative and commercial traders according to the most recent Commitment of Traders report. For the week ending February 24, non-commercial traders were short a new 2,600 contracts, while commercial traders were adding to their net-long position by adding nearly 2,700 new net-long positions to stand at 2,849 contracts.? ?
Fundamentals
This famous quote from the 1983 movie Trading Places might have been heard in the old Frozen Concentrated Orange Futures (FCOJ) ring earlier this week, if there was still floor trading at the old New York Board of Trade and now ICE US exchange, as continued weak retail demand for O.J. and a weak Brazilian currency were key catalysts for the aggressive selling seen on Tuesday. The lead month May futures fell to lows not seen since early in 2013 as long liquidation selling sent prices as low as 110.50 prior to some bargain hunting buying emerged. Retail O.J demand continues wane with February?s sales down over 4.5 million gallons from year ago levels. On top of slumping demand, the continued weakening of the Brazilian real could encourage increased juice exports from Brazil in order to benefit from the conversion between the real and the dollar. While the fundamentals remain solidly in the bearish camp, some of the technical, especially the 14-day RSI seem to signal that prices may have become oversold. However, even Valentine and Winthorpe, may want to see further confirmation that a near-term low is in place prior to becoming bullish on FCOJ future.
Technical Notes? -? View Today’s Chart
Looking at the daily chart for May O.J. futures we notice prices reaching over 2-year lows earlier this week but saw some short-covering buying emerge once it appeared that support near the 110.00 price level would hold. While prices still remain well below the 20-day moving average, the 14-day RSI has moved to oversold levels, with a current reading of 27.65. The recent low at 110.50 is seen as support for the May contract with resistance found at 127.00.
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