Cotton lower as prices encourage farmers to sell

COFFEE

General Comments: Futures were lower on speculative and origin selling tied to a stronger US Dollar. London held better on follow through buying as 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. 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 2.642 million bags. The ICO composite price is now 133.29 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 to down with objectives of 140.00 March. Support is at 142.50, 141.00, and 138.00 March, and resistance is at 147.00, 150.00, and 151.00 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 2060, 2070, 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.

SUGAR         

General Comments: Futures closed lower as the US Dollar moved higher. Most traders still note that big supplies appear to be available to the market, but Brazil said it will increase the ethanol in its gasoline blends in May. There are ideas that this could help work off a lot of the surplus production in Brazil and could tighten world balance sheets. 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. The Thai crushing season is underway with good production expected, but the crushing and export pace remain slow. It is possible that the crop size there has been overestimated. 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 are expected in Brazil through this weekend. Temperatures should be near to above normal.

Chart Trends: Trends in New York are mixed to up with objectives of 1935 May. Support is at 1875, 1850, and 1835 May, and resistance is at 1900, 1920, and 1940 May. Trends in London are mixed to up with objectives of 520.00 May. Support is at 507.00, 503.00, and 500.00 May, and resistance is at 512.00, 517.00, and 521.00 May.

COCOA       

General Comments: Futures closed a little lower on US Dollar strength. Speculators seemed to be the biggest traders on both sides of the market. Futures might be finding a peak in prices in the current range as the overall fundamental picture is not strong. 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 coller and wetter weather iss 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 déficit 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 lower today at 3.810 million bags.

Chart Trends: Trends in New York are mixed. Support is at 2155, 2145, and 2115 March, with resistance at 2215, 2230, and 2250 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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