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Thursday, December 08, 2005

DJ Nybot FCOJ Review: Firms On Spec Buying, Positioning

DOW JONES NEWSWIRES

Frozen concentrated orange juice futures on the New York Board of Trade rose Thursday on speculative purchases and on traders adjusting positions ahead of a key crop report, sources said.

Most-active January juice settled 95 points higher at $1.2420 a pound.

"Today's trade was pretty much position-squaring ahead of tomorrow's USDA report," said Mike Zarembski, analyst and futures desk manager at XPRESSTRADE.com.

January FCOJ made a gradual climb toward its daily high on light speculative buying. Prices spiked higher in the last 20 minutes of the session but quickly shed a portion of those gains as trading ended.

"Looks like some money was taken off the table, especially by the shorts. It looks like the fear is for a higher-than-expected decline (in the Florida orange estimate)," Zarembski added.

Many traders and analysts expect a crop estimate of 165 million to 170 million, 90-pound boxes, down from the USDA's October estimate of 190 million boxes.

Meanwhile, a fair amount of activity was seen in the options trade.

"I know our customers were definitely looking at the $1.25 to $1.30 January calls as a cheap way to play a possible surprise number of 160 (million) even," Zarembski said.

However, if a larger-than-expected number materializes, given the heavy net-long positions by speculators, a $1.20 near-term downside target is possible on January juice, with the $1.15 level a potential target in the next week or two, he added.

Florida citrus groves saw mostly dry conditions on Wednesday, though showers with rain amounts of 0.20-0.75 inch are developing. Mostly dry conditions with a few light showers are seen Friday and Saturday, with more showers on Sunday, DTN Meteorlogix said.

Technical support on January FCOJ is found at $1.2275, $1.2165, $1.2080, $1.2075, $1.1825 and $1.1540. Resistance is met at $1.2515, $1.2550 and the $1.2790 contract high.

Futures volume was estimated at 3,372 contracts, with 3,179
options traded.

-By Tom Sellen, Dow Jones Newswires; 913-322-5177;

tom.sellen@dowjones.com


(END) Dow Jones Newswires

12-08-05 1516ET

Copyright (c) 2005 Dow Jones & Company, Inc.