Sugar higher as Brazil said to increase ethanol in gas blends

FCOJ

General Comments: Futures closed higher on speculative buying. Ideas are that USDA can show smaller crops in its reports this week due to the greening disease and dry weather that has been reported in Florida. USDA has cut production potential in the previous two estimates and might be forced to trim the estimate a little more next month. Weather remains about the same in Florida. Temperatures remain mild in the state, and conditions are mostly dry. Forecasts call for mostly dry conditions and mild temperatures to continue after some overnight showers and storms. Forecasts do not call for any threatening temperatures, but dry weather is creating ideas that more fruit can be lost. 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, and the Valencia harvest is underway. Weather in Brazil is reported to be good. Brazil is seeing near to above normal temperatures and scattered showers. Harvest is continuing, so an increase in supplies should be expected at this time of year.

Overnight News: Florida weather forecasts call for mostly dry conditions. Temperatures will average above normal.

Chart Trends: Trends in FCOJ are up with objectives of 123.00, 125.00, and 131.00 March. Support is at 120.00, 116.00, and 113.00 March, with resistance at 123.00, 126.00, and 128.00 March.

COFFEE

General Comments: Futures were higher on speculative buying that found little offer from origin. Brazil producers were not selling as the Real strengthened against the US Dollar, and Vietnam producers were not selling much, either. London trends turned up on Friday. Prices for Arabica remain in the recent trading range, with bulls talking about the losses from rust in Central America and the bears noting that there is more than enough coffee being produced in other countries to cover the losses seen in Central America. The problem is serious there, with all countries being affected. Conservative crop estimates put the losses at about 25%, and some say the percentage lost is higher and could be 35% or more. For now, it looks like Central America could lose at least 5% of the total crop this year and more next year. Current crop development is good this year in Brazil, and production areas are getting beneficial showers for the developing crop. Production ideas remain big there, and also remain big in Vietnam even though producers there talk about the potential for 25% crop losses. Central America crops are mostly harvested. Colombia is reported to have good conditions.

Overnight News: Certified stocks are higher today and are about 2.628 million bags. The ICO composite price is now 135.21 ct/lb. Brazil should get mostly dry conditions this week and scattered showers and storms this weekend and into next week. 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. Support is at 146.00, 145.50, and 142.50 March, and resistance is at 151.50, 154.50, and 158.00 March. Trends in London are up with objectives of 2070, 2100, and 2290 March. Support is at 2020, 2000, and 1985 March, and resistance is at 2050, 2060, and 2085 March. Trends in Sao Paulo are mixed to down with objectives of 179.00 March. Support is at 181.00, 179.50, and 179.00 March, and resistance is at 185.00, 188.00, and 190.00 March.

COCOA

General Comments: Futures closed mixed, as New York closed unchanged to a little lower and as London closed higher on what was called speculative short covering. Speculators seemed to be the biggest traders on both sides of the market. There were also reports of end user demand as prices have gotten very cheap lately. 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 and for the mid-crop and next crop. Nigerian sources told wire services that current colder and wetter weather is very good for mid-crop development. Demand is still 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 deficit next year. Ivory Coast growing conditions are reported good right now as the Harmattan winds have subsided without causing any real damage to crops. Some showers have been reported there and in Ghana as well.

Overnight News: Mostly dry conditions are expected in West Africa, but some showers are expected in coastal areas. Temperatures will average 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 higher today at 3.824 million bags.

Chart Trends: Trends in New York are mixed to up with objectives of 2360, 2450, and 2690 March. Support is at 2155, 2145, and 2115 March, with resistance at 2230, 2250, and 2275 March. Trends in London are mixed. Support is at 1410, 1405, and 1380 March, with resistance at 1445, 1455, and 1465 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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