Coffee finds support as producers pessimistic on 2013 crop

FCOJ

General Comments: Futures closed higher on what appeared to be speculative short covering as warm and mostly dry weather continued in Florida. It was cold in California last week, but so far there have been no reports of losses. California will see moderating temperatures through the week. Weather remains good in Florida, although more rain would be beneficial. Temperatures remain mild in the state, and conditions are mostly dry. Forecasts call for mostly dry conditions to continue. Fruit is holding for now, and irrigation is being used by producers to hold crop condition. 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 above normal.

Chart Trends: Trends in FCOJ are up with objectives of 119.00 and 125.00 March. Support is at 113.50, 110.00, and 109.00 March, with resistance at 118.00, 122.00, and 126.00 March.

SUGAR

General Comments: Futures closed a little lower on follow through selling tied to reports of beneficial rains in Brazil and on no real demand news on Friday, and London saw follow through selling yesterday. Traders are looking for demand as supply does not seem to be a problem right now. Production has been strong in Brazil so far this year, but the areas with the best weather have been in the Center-South region. The rains are also now in the north where conditions had been too dry. Exports from Brazil continue to be very strong after the delayed start to the program. Futures 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. The Thai crushing season is underway with good production expected, but the crushing pace remains slow. Traders wonder if and when India will cut offers to the market due to the lower prices and perhaps less than expected production due to some dry weather at the beginning of the growing season.

Overnight News: Scattered and light showers are expected in Brazil this weekend after a mostly dry week. Temperatures should be near normal. China imported 268,362 tons of Sugar in December, down 46% from December, 2011. Total 2012 exports were 3.75 million tons, up 28% from 2011.

Chart Trends: Trends in New York are down with objectives of 1820, 1810, and 1760 March. Support is at 1830, 1800, and 1770 March, and resistance is at 1885, 1900, and 1925 March. Trends in London are down with no objectives. Support is at 490.00, 485.00, and 480.00 March, and resistance is at 500.00, 505.00, and 510.00 March.

COCOA

General Comments: Futures closed lower in consolidation trading on Friday, and London stayed in a consolidation trade yesterday as it closed narrowly mixed. The North American grind data was released after the close on Thursday and did not help to support prices Friday. 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 because of changes forced by the World Bank that encouraged forward marketing of the crops. Traders are starting to look ahead and past the midcrop harvest and note that the market could move to a production deficit next year.

Overnight News: Mostly dry conditions are expected in West Africa. Temperatures will average mostly above normal. Malaysia and Indonesia should see episodes of scattered showers, but Malaysia will be drier this weekend. Temperatures should average near normal. Brazil will get scattered showers and warm temperatures. ICE certified stocks are lower today at 3.823 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. The Asian Cocoa grind was 155,237 tons in the fourth quarter of last year, up 2.8% from 2011. Total processed in 2012 was 606,622 tons, from 585,585 tons in 2011.

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.

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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