Sugar, cocoa trend lower on good production numbers

COTTON

General Comments: Futures were a little lower as traders get ready for the USDA January reports that will be released on Friday morning, Chicago time. A stronger U.S. dollar hurt demand ideas, but ideas are that the overall pace of export sales remains strong. Some are wondering if planted area might be lower next year here in the U.S. because of weak prices against competing crops. The area lost would go mostly to Corn and Soybeans. Current weather features some precipitation in Delta and Southeast areas, but western Texas was mostly dry. Trends are not well defined on the charts, but ideas are that the market can continue to work higher overall.

Overnight News: The Delta and Southeast will be dry today and tomorrow, then will see rain move from west to east the balance of the week. Temperatures will average above normal. Texas will get dry weather except for some rain on Wednesday. Temperatures will average above normal. The USDA spot price is now 70.80 ct/lb. ICE said that certified Cotton stocks are now 0.097 million bales, from 0.094 million yesterday.  

Chart Trends: Trends in Cotton are mixed. Support is at 74.60, 74.40, and 73.70 March, with resistance of 75.90, 76.40, and 76.95 March.

FCOJ

General Comments: Futures closed lower again as favorable weather remains in the forecast for Florida. Temperatures remain mild in the state, and conditions are mostly dry. More rain would be beneficial, but current forecasts are on the dry side. Fruit is holding for now, and irrigation is being used by producers to hold crop condition. Winter is here, and with winter comes the threat for a freeze to Oranges and other fruits grown in Florida, but there is no real cold weather in the forecast. Harvest in Florida of mid and early oranges is continuing. Demand for domestically produced Juice remains down from last year. Weather in Brazil is reported to be good. Brazil is seeing warm temperatures and light showers or dry conditions.

Overnight News: Florida weather forecasts call for mostly dry conditions. Temperatures will average near to below normal. ICE said that 0 delivery notices were posted today and that total deliveries for the month are now 0 contracts.

Chart Trends: Trends in FCOJ are down with no objectives. Support is at 108.00, 107.00, and 104.00 March, with resistance at 118.00, 122.00, and 126.00 March.

COFFEE

General Comments: Futures were lower as London seemed to reverse from its short term rally. Charts still show that New York and Sao Paulo are in a trading range, with both possibly trying to complete a bottom. London futures fell back into a trading range with the price action yesterday. Brazil still has most of its production to sell and is getting some competing offers in the short term from Central America and Colombia. Current crop development is good this year in Brazil as moderate temperatures have been reported, but production areas could use more rain for the developing crop. Some rain is forecast for Coffee areas starting today. Central America crops are getting harvested, and conditions are called good there. There are widespread reports of rust on the trees and leaves, and Roya has become a big issue as well. It is possible that many Central America and Mexico producers will harvest much less Coffee next year if they are affected by this disease, and many seem to be affected. We are already hearing significant loss estimates for the next crop due to Roya. Colombia is reported to have good conditions.

Overnight News: Certified stocks are a little lower today and are about 2.585 million bags. The ICO composite price is now 133.86 ct/lb. Brazil should get scattered showers through the weekend. Temperatures will average near to above normal. Colombia should get scattered showers, and Central America and Mexico should get mostly dry conditions, but a few showers are possible in southern Mexico and northern Central America. Temperatures should average near to above normal.  Conab said that Brazil could produce between 46.98 and 50.16 million bags of Coffee in 2013, from 50.83 million in 2012.

Chart Trends: Trends in New York are mixed. Support is at 146.00, 143.00, and 141.00 March, and resistance is at 152.00, 155.00, and 157.00 March. Trends in London are mixed. Support is at 1900, 1870, and 1860 March, and resistance is at 1935, 1945, and 1975 March. Trends in Sao Paulo are mixed. Support is at 182.00, 179.00, and 178.00 March, and resistance is at 188.00, 190.00, and 193.50 March.

About the Author
Jack Scoville

Jack Scoville is a veteran futures market analyst specializing in grains, softs, rice, oilseeds, and tropical products such as coffee and sugar. His industry contacts in South America, Europe, Asia, and North America provide him with a unique and comprehensive view of these markets. Jack began working in the futures industry over 30 years ago and spent 10 years working on the floor of the Chicago Board of Trade in various roles, starting with The PRICE Futures Group since it was established in 1988. Jack writes daily commentaries - Morning Grains and Softs, in both English and Spanish and is regularly quoted around the world by news & wire services including Dow Jones, AP, Bloomberg, and Reuters. You can contact Jack by phone at (312) 264-4322 or by email at jscoville@pricegroup.com. Learn even more on our website at www.pricegroup.com.

Futures and options trading involves substantial risk of loss and may not be suitable for everyone. The information presented by The PRICE Futures Group is from sources believed to be reliable and all information reported is subject to change without notice.

Comments
comments powered by Disqus