Cocoa consolidating as West Africa completes harvest


General Comments: Futures closed lower yesterday. Chart patterns are consolidating and market trends are still down overall, but ideas are that the market can turn higher now that the main harvest in West Africa is about over. The weather was warm and dry in West Africa this week, but temperatures are not extreme. 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, but a little hot and dry for the mid-crop and next main crop development. Traders are starting to look ahead and past the midcrop harvest and note that the market could move to a production deficit next year. More buying is being noted in deferred months at this time due to smaller production ideas for the coming crops.

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 said that 15 contracts were delivered today against March contracts and that total deliveries for the month are now 826 contracts. ICE certified stocks are lower today at 4.105 million bags.

Chart Trends: Trends in New York are mixed. Support is at 2130, 2100, and 2085 May, with resistance at 2155, 2190, and 2210 May. Trends in London are mixed to perhaps up with objectives of 1455 and 1490 May. Support is at 1420, 1405, and 1390 May, with resistance at 1450, 1475, and 1495 May.


General Comments: Futures were a little higher yesterday in response to strong economic data from the US. 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 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 dry conditions. Temperatures will average below normal. Texas will get dry weather. Temperatures will average below normal, but above normal on Sunday. The USDA spot price is now 75.84 ct/lb. ICE said that certified Cotton stocks are now 0.364 million bales, from 0.347 million yesterday. ICE said that 53 contracts were delivered yesterday and that total deliveries for the month are 1,309 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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