Cotton higher as traders contemplate planting area

COFFEE

General Comments: Futures were lower on what appeared to be speculator selling. Analysts said there was a pickup in offers from Brazil, although there were no reports from origin to confirm that. It mostly seemed like fund selling that started the ball rolling, then some sell stops got hit on the way down and found very little buying interest. Trends turned down for the short term yesterday, but prices remain in the recent trading range longer term. 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. Costa Rica says the country could lose up to 30% of the crop, and Mexico expects to see a significant impact. Crops in Guatemala, Honduras, and El Salvador have also been affected, but so far crops in Nicaragua seem to show less damage. Colombia is reported to have good conditions.

Overnight News: Certified stocks are higher today and are about 2.608 million bags. The ICO composite price is now 134.09 ct/lb. Brazil should get mostly dry conditions this week and scattered showers and storms this weekend. Temperatures will average near normal. Colombia should get mostly dry conditions, and Central America and Mexico should get mostly dry conditions. Temperatures should average near to above normal.  

Chart Trends: Trends in New York are mixed to down with objectives of 147.50 and 140.00 March. Support is at 145.50, 142.50, and 141.00 March, and resistance is at 154.50, 158.00, and 160.00 March. Trends in London are mixed. Support is at 1930, 1905, and 1900 March, and resistance is at 1965, 1980, and 1990 March. Trends in Sao Paulo are mixed. Support is at 183.00, 182.00, and 179.50 March, and resistance is at 187.00, 190.00, and 193.00 March.

SUGAR 

General Comments: Futures closed lower on follow through selling tied to reports of beneficial rains in Brazil and on no real demand news yesterday. Traders are looking for demand as supply does not seem to be a problem right now. In fact, most statistical organizations continue to look for a big surplus production for the year. Production has been strong in Brazil so far this year, and reports say that the new crop production looks to be strong as well. Exports from Brazil continue to be very strong after the delayed start to the program. Futures trends are 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.  

Chart Trends: Trends in New York are down with objectives of 1810 and 1760 March. Support is at 1800, 1770, and 1740 March, and resistance is at 1840, 1860, and 1885 March. Trends in London are down with objectives of 455.00 and 415.00 March. Support is at 480.00, 475.00, and 470.00 March, and resistance is at 495.00, 496.00, and 501.00 March.

COCOA

General Comments: Futures closed lower on what appeared to be speculative selling tied to bad demand ideas. 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. Traders are starting to look ahead and past the midcrop harvest and note that the market could move to a production déficit 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 3.798 million bags. Ivory Coast arrivals are now estimated at 896,000 tons, from 824,000 tons last year

Chart Trends: Trends in New York are mixed. Support is at 2205, 2195, and 2155 March, with resistance at 2250, 2275, and 2310 March. Trends in London are mixed to down with objectives of 1425 March. Support is at 1430, 1410, and 1405 March, with resistance at 1465, 1480, and 1500 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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