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Friday, May 05, 2006

Dow Jones Newswire FCOJ Review with Mike Zarembski

DOW JONES NEWSWIRES

Frozen concentrated orange juice futures extended their rally to another new
round of 14 1/2-year highs Friday, as speculative traders added to long
positions amid a short Florida crop and the approach of the 2006 tropical storm
season, traders said.

Nearby May FCOJ rose 45 points to $1.5385, while most active July gained 115
points to $1.5595 a pound. The July contract at one point during the session
reached a $1.5640 high - FCOJ's strongest price on a continuationbasis since
January 1992, when it traded to $1.6100.

"It looks like we're putting in a weather premium into this market. Traders
are worried about the upcoming hurricane season," said Mike Zarembski, analyst
and futures desk manager at XPRESSTRADE in Chicago.

"Nobody wants to take chances," he added, with weather forecasters predicting
another active tropical storm season this year.

Volume was light, allowing prices to climb to their highs amid a lack of
commercial selling.

A short Florida crop that the U.S. Department of Agriculture estimates at 153
million 90-pound boxes provides continued support, along with abnormally dry
conditions throughout most of the state.

The USDA will issue its May crop production forecast next Friday, and some
traders and analysts say there may be room for the government to trim another 1
million boxes off the current estimate.

Though prices reached 14 1/2-year highs and the market is overbought,
Zarembski said there is still room for prices to climb. He is eyeing the
$1.6100 area from January 1992 as an upside target. After that he expects
commercial selling and hedging pressure to limit any advances.

Bullish options trade also helped lift prices, a trader said.

FCOJ futures volume was estimated at 1,643 contracts, with 3,337 calls and 98
put options traded.

The May/July spread settled at 210 points, May under, widening 70 points from
Thursday's settlement.

On Thursday, FCOJ open interest rose 141 to 35,771 positions. Traders
liquidated 247 May positions and added 355 to July. Total May interest is down
to 370, while July increased to 26,741 positions.