Sugar mixed as bulls try to overcome lack of demand

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.

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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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