Coffee grapples with Colombian farmers looking for higher prices

COFFEE

General Comments: Futures were lower again yesterday, but held some support areas. It still seems that New York is trying to form a low in this area. Some support came from news that Colombia Coffee farmers will not deliver as they seek higher prices for crops so they can cover costs and even make a small profit. Reports of rust in Central America and the production cuts that it is causing are getting more attention. 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 still good this year in Brazil, and production areas are getting drier weather for the developing crop. There is some talk the drier weather could stress trees. 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 2.681 million bags. The ICO composite price is now 132.23 ct/lb. Brazil should get scattered showers through Wednesday, then mostly dry weather. Temperatures will average near to above normal. Colombia should get scattered showers, and Central America and Mexico should get mostly dry conditions. Temperatures should average near to above normal. ICE said that 2 contracts were delivered today against March futures and that total deliveries for the month are 99 contracts. Vietnam exported 100,000 tons of Coffee in February, from 219,000 tons in January.

Chart Trends: Trends in New York are mixed. Support is at 141.00, 137.00, and 134.00 May, and resistance is at 145.00, 147.00, and 149.00 May. Trends in London are mixed to up with objectives of 2110 and 2145 May. Support is at 2070, 2040, and 2010 May, and resistance is at 2110, 2130, and 2140 May. Trends in Sao Paulo are mixed. Support is at 180.00, 178.00, and 177.00 September, and resistance is at 185.00, 187.00, and 189.00 September.

COTTON

General Comments: Futures were lower yesterday in response to weaker economic data from China and as spending cuts for the government draw nearer. The Chinese preliminary manufacturing data showed that the economy might have slowed in February, and China is the world’s largest importer of Cotton. Ideas are that the across the board cuts will hurt the economy and therefore Cotton demand. 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 U.S. 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 should turn drier for the rest of the week after a lot of precipitation hit the growing areas over the last couple of days. Delta and Southeast areas will see some significant precipitation later in the week.

Overnight News: The Delta and Southeast will see showers and rain today. Both regions should be dry for the rest of the week. Temperatures will average below normal. Texas will get dry weather after precipitation ends today. Temperatures will average below normal. The USDA spot price is now 75.76 ct/lb. ICE said that certified Cotton stocks are now 0.364 million bales, from 0.347 million yesterday. ICE said that 147 contracts were delivered yesterday and that total deliveries for the month are 1,256 contracts.

Chart Trends: Trends in Cotton are mixed to down with objectives of 78.85 and 74.95 May. Support is at 81.40, 80.70, and 79.75 May, with resistance of 82.80, 84.00, and 85.25 May.

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