Double Espresso

  • July 18, 2000
  • Marc Dupee

Coffee packed a one-two punch, following up Monday’s 10% gain with a 17.8% move
Tuesday as forecasts for freezing temperatures in the primary growing regions of
Brazil materialized. The largest growing state, Minas Gerais, said temperatures
dropped to below freezing Tuesday in the lower lying areas of the region,
implying higher-elevation plantations suffered even lower temperatures, and
possibly greater crop-damage. In another major growing region, Parana, reports
indicated recent frosts damaged approximately 80-90% of the coffee plants. 

Although there are no other definitive reports on the
extent of the damage to the crop, the Brazilian National Weather Service
predicted more freezing temperatures would hit growing regions Thursday. Coffee
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registered on the
New 10-Day Highs List and closed 18.00 higher at 119.05. 

Other softs and fibers also posted solid gains after
registering on the Momentum-5
List. September sugar
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highs, adding .38 to 10.04 Tuesday and gained additional upside steam from the
cold-weather threat in Brazil. December cotton
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limit levels Monday, gaining ground after the U.S. Department of Agriculture
reported that the U.S. crop condition deteriorated in its weekly update. Dec.
cotton rose .42 to 62.91.

Stock index futures sold off on the CPI news but ended
off their lowest levels of the session.
September S&P futures
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NASDAQ 100 futures
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86.50 at 4023.50. Dow futures
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Interest rate futures demonstrated they had discounted
the slightly higher inflation numbers: September T-bonds
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practically unchanged Tuesday after sliding 1 1/2-points over the past two
sessions.  

Dollar index futures
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CPI report. The combination of slightly higher interest rates, moderate core
inflation and steady economic growth proved a comparatively healthy mix for
dollar bulls. The September contract gained .61 to 109.06.

Traders seemed to ignore comments from Bank of Japan
Governor Masaru Hayami that the central bank would soon raise rates above
near-zero levels. The yen
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level of the year and at the neckline of a head-and-shoulders top at .9332.

Crude oil and the energy complex moved higher after the
OPEC President Ali Rodriguez said OPEC would stick to its price band mechanism
and that  Saudi Arabia would not unilaterally increase output by one-half
million barrels a day, as it had implied in earlier statements. The cartel’s
agreement stipulates that OPEC would only raise production once a basket of OPEC
crude oil remains above $28 per barrel for more than 20 days. OPEC crude
recently dropped under the $28 band. September crude oil
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unleaded gasoline
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heating oil
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natural gas
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