Coffee traders contemplate Central America crop losses

COFFEE

General Comments: Futures were higher as March went into delivery with just a few contracts tendered and as origin selling was less due to the fact that March contracts are now priced. 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. The bears have been in control of the market until now, but price action yesterday suggested that this control might finally be passing. For now, it looks like Central America could lose at least 20% of the total crop this year and more next year. Losses next year could be 30% or more of the crop. 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 slightly lower today and are about 2.672 million bags. The ICO composite price is now 130.62 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. ICE said that 27 contracts were delivered today against March futures and that total deliveries for the month are 41 contracts.

Chart Trends: Trends in New York are mixed. Support is at 137.00, 134.00, and 131.00 May, and resistance is at 143.00, 145.00, and 147.00 May. Trends in London are mixed. Support is at 2040, 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.

COTTON

General Comments: Futures were higher on new speculator buying. Bears point to increasing certified stocks levels for reasons to be bearish. Demand bulls noted positive economic data in general and ideas of reduced planted area in the US this season as reasons to buy. 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. Texas areas could get some significant precipitation in the next day or two. Delta and Southeast areas will see some significant precipitation late in the week. Ideas are that the market can continue to work higher overall.

Overnight News: The Delta and Southeast will see showers and rain on Friday, and the Southeast could see precipitation through the weekend. Temperatures will be variable in the Delta and will average near to above normal in the Southeast. Texas will get dry weather after precipitation ends today. Temperatures will average near to above normal. The USDA spot price is now 78.01 ct/lb. ICE said that certified Cotton stocks are now 0.307 million bales, from 0.288 million yesterday. USDA estimated Cotton production this year at 14.0 million bales on planted area of 9.8 million acres. The average farm price is estimated at 73.00 cents per pound for the new crop.

Chart Trends: Trends in Cotton are mixed to up with objectives of 91.00 March. Support is at 81.70, 80.55, and 80.20 March, with resistance of 83.40, 84.00, and 85.30 March.

Next page: Orange juice, Sugar and Cocoa

Page 1 of 2 >>
Comments
comments powered by Disqus
Check out Futures Magazine - Polls on LockerDome on LockerDome