Cocoa looks for support in grind data

COCOA

General Comments: Futures closed higher on what appeared to be speculative buying tied to a trend change to higher on the charts. The North American grind data was released after the close and should help to support prices today. Good arrivals in Africa are negative and are continuing. Ivory Coast arrivals are strong, and the trend for strong arrivals from there should continue. 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, but the EU and Ivory Coast data implies that a lower trade can continue.

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 a little higher today at 3.832 million bags. Ghana Cocoa purchases are 485,000 tons so far this year, from 586,000 tons last year. The North American Cocoa grind was 120,053 tons, from 118,926 tons last year.

Chart Trends: Trends in New York are up with objectives of 2360, 2450, and 2690 March. Support is at 2270, 2230, and 2205 March, with resistance at 2325, 2355, and 2370 March. Trends in London are up with objectives of 1490 and 1535 March. Support is at 1465, 1445, and 1430 March, with resistance at 1490, 1510, and 1525 March.

COTTON

General Comments: Futures were higher and turned trends up on follow through buying from news that the Chinese government auction of its Cotton stocks went poorly. Buyers there were not interested due to poor quality and relatively high prices. The news implied that demand for world Cotton can stay strong as mills in China will still import despite big import fees and taxes. USDA showed strong export sales to help the rally, and good economic data for the US helped the rally, too. The current low prices are bringing into question what farmers in Texas and the Delta and Southeast will plant this year. Some are wondering if planted area might be lower this year here in the US due to 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. Delta areas will turn dry today. Trends are not well defined on the charts, but ideas are that the market can continue to work higher overall.

Overnight News: The Delta will be dry all week and Southeast will get showers or rains today, then will see dry conditions move from west to east the balance of the week. Temperatures will average near to above normal in the delta and near to below normal in the Southeast. Texas will get dry weather. Temperatures will average near to above normal. The USDA spot price is now 73.13 ct/lb. ICE said that certified Cotton stocks are now 0.103 million bales, from 0.103 million yesterday.

Chart Trends: Trends in Cotton are up with objectives of 78.40 March. Support is at 77.00, 76.90, and 76.40 March, with resistance of 78.00, 79.60, and 79.90 March.

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