SUGAR
General Comments: Futures closed mixed, with New York a little lower on Friday, but London higher yesterday. The lack of demand news has hurt the bull case and made it hard to sustain rallies given big production ideas. However, some are looking for a short covering rally in the short term. Brazil said it will increase the ethanol in its gasoline blends in May, and 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, so the diversion into more domestic ethanol use will help. Exports from Brazil continue to be very strong after the delayed start to the program. The Thai crushing season is continuing, 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: Mostly dry weather expected in Brazil through this weekend. Temperatures should be near to above normal. Iraq has tendered to buy 50,000 tons of White Sugar. Wire reports indicate it bought 200,000 tons last week.
Chart Trends: Trends in New York are down with objectives of 1750 and 1700 May. Support is at 1760, 1730, and 1700 May, and resistance is at 1800, 1820, and 1850 May. Trends in London are mixed. Support is at 489.00, 486.00, and 483.00 May, and resistance is at 499.00, 502.00, and 508.00 May.
COTTON
General Comments: Futures were a little lower as traders reacted to the USDA reports. It was mostly a consolidation trade. Many are worried about a bearish surprise as prices have gotten much stronger in the last week. Bears point to increasing certified stocks levels for reasons to be bearish. Demand bulls noted positive economic data released last week and positive economic data in general as a reason to buy. However, export sales reports showed some reason for worry last week as sales were down and China cancelled some recent purchases. The current low new crop 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 featured some precipitation in Delta and Southeast areas, but western Texas was mostly dry. Delta and Southeast areas will be dry. Ideas are that the market can continue to work higher overall.
Overnight News: The Delta and Southeast will see showers and rain Thursday and Friday, then a dry weekend. Temperatures will average near to above normal. Texas will get dry weather. Temperatures will average below normal. The USDA spot price is now 76.67 ct/lb. ICE said that certified Cotton stocks are now 0.238 million bales, from 0.221 million yesterday.
Chart Trends: Trends in Cotton are mixed. Support is at 80.55, 80.20, and 79.90 March, with resistance of 82.10, 82.30, and 83.40 March.
Next page: Orange juice, Cocoa and Coffee
FCOJ
General Comments: Futures closed a little lower on speculative trading in preparation for a cool weekend. It was cool, but not cold enough to do any damage. Weather should improve in Florida after one more cold shot early this week. Temperatures remain cool in the state, and conditions are a little more wet. Forecasts do not call for any threatening temperatures, but recent 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 dry conditions or 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 willaverage below normal. CitrusBR in Brazil estimates oranges production there at 281 million boxes this year, down 23% from last year.
Chart Trends: Trends in FCOJ are mixed. Support is at 125.00, 123.50, and 122.00 March, with resistance at 132.00, 135.00, and 139.00 March.
COFFEE
General Comments: Futures were lower on speculative selling tied to reports of good weather in Brazil and increased production in Colombia. London was lower on primarily speculative selling as Vietnam producers are not selling due to the Tet holiday. Prices for Arabica continue to work lower on ideas of big production. Bulls keep talking about the losses from rust in Central America and the bears keep 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 lower today and are about 2.669 million bags. The ICO composite price is now 129.29 ct/lb. Brazil should get mostly dry weather. Temperatures will average near to above normal. Colombia should get mostly dry conditions, and Central America and Mexico should get mostly dry conditions. Temperatures should average near to above normal. GCA stocks are now 4.776 million bags, from 4.735 million last month.
Chart Trends: Trends in New York are down with objectives of 125.00 and 108.00 May. Support is at 137.00, 134.00, and 131.00 May, and resistance is at 143.00, 145.00, and 147.00 March. Trends in London are mixed. Support is at 2050, 2010, and 2000 May, and resistance is at 2080, 2100, and 2130 May. Trends in Sao Paulo are down with no objectives. Support is at 177.00, 174.00, and 171.00 September, and resistance is at 181.00, 183.00, and 186.00 September.
COCOA
General Comments: Futures closed lower on Friday and London was lower yesterday despite forecasts for stressful weather for developing crops in West Africa. There were reports of Ghana selling. Hot and dry winds now could hurt the mid-crop production and also hurt some development of the crops for next year. Speculators seemed to be the best buyers as trends started to turn up on the charts. 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, although hot and dry weather could hurt. 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 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 3.945 million bags. LIFFE stocks are now 2,672 standard lots, 132 large lots, and 3 bulk lots.
Chart Trends: Trends in New York are down with objectives of 2110 and 2030 May. Support is at 2130, 2120, and 2085 May, with resistance at 2150, 2190, and 2210 May. Trends in London are down with objectives of 1390 and 1365 May. Support is at 1405, 1390, and 1370 May, with resistance at 1420, 1440, and 1450 May.
