Cotton falls as traders wait USDA report, planting area worries

COFFEE

General Comments: Futures were a little lower again yesterday. Charts still show that all three markets are in a trading range, with all possibly trying to complete a bottom. There is more and more talk that the market is getting ready to rally in New York after all the selling seen in the past months. Current crop development is good this year in Brazil, and production areas are getting beneficial rain for the developing crop. 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 2.584 million bags. The ICO composite price is now 134.06 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.  The ICO estimated world 2012-13 Coffee production at 144.1 million bags, down 1.3% from its previous estimate, as the ICO noted crop losses due to Roya.

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.

SUGAR                                                            

General Comments: Futures closed a little higher in consolidation trading. There was talk of support coming from the index fund rebalancing as index funds should need to buy more contracts. Futures are in a trading range, but trends are turning down. News of any kind remains hard for the traders to find. There was no demand news to support values. Big Brazil production remains negative to prices, and traders know that Indian and Thai production is in the market, too. Conditions still look good for many production areas. The Thai crushing season is underway with good production expected, but the crushing pace is called slow right now. Brazil production continues strong.

Overnight News: Scattered and light showers are expected in Brazil through the weekend. Temperatures should be near to above normal.

Chart Trends: Trends in New York are mixed to down with objectives of 1810 March. Support is at 1850, 1830, and 1800 March, and resistance is at 1910, 1925, and 1945 March. Trends in London are mixed to down with objectives of 494.00 March. Support is at 502.00, 500.00, and 495.00 March, and resistance is at 510.00, 516.00, and 520.00 March.

COCOA                                                                 

General Comments: Futures closed a little higher in consolidation trading. Good arrivals in Africa are negative and are continuing. Ivory Coast arrivals are strong, and the trend for strong arrivals from there should continue. Ivory Coast arrivals are now estimated at 809,000 tons, from 728,000 tons last year. Ghana producers are reported to be selling as well. Malaysia and Indonesia crops appear to be in good condition and weather is called favorable. Overall weather patterns in West Africa production areas are good for harvest progress. Demand is reported weaker from the US and Europe, in part due to current economics and in part due to changes forced by the World Bank that encouraged forward marketing of the crops. The market needs some demand news or some other news to shake it out of the sideways to lower trade. This news could come son as the main West Africa harvest should be about over and there is a lot of talk that production next year will be less.

Overnight News: Mostly dry conditions are expected in West Africa. Temperatures will average near to above normal. Malaysia and Indonesia should see episodes of scattered showers. Temperatures should average near normal. Brazil will get dry conditions and warm temperatures. ICE certified stocks are sharply higher today at 3.841 million bags.

Chart Trends: Trends in New York are mixed. Support is at 2205, 2195, and 2155 March, with resistance at 2235, 2275, and 2290 March. Trends in London are mixed. Support is at 1410, 1405, and 1380 March, with resistance at 1450, 1455, and 1490 March.

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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.

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