Coffee finds support in reports of rust disease spreading

COFFEE

General Comments: Futures were a little higher Friday after trading a little lower much of the session. Speculators were seen on both sides of the market as they sold early and bought later. 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 and some support came from even more reports of severe rust damage in Central America. Reports of rust in Central America and the production cuts that it is causing are getting noticed, as is news that the rust is now reported in Peru. 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. Vietnam producers there talk about the potential for 25% crop losses due to prolonged drought in the Central Highlands. India might lose 5% of its Robusta crop due to unseasonal rains at harvest time. Central America crops are mostly harvested. Colombia is reported to have good conditions.

Overnight News: Certified stocks are higher today and are about 2.692 million bags. The ICO composite price is now 132.49 ct/lb. Brazil should get 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 1 contract was delivered today against March futures and that total deliveries for the month are 102 contracts.

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 2145 May. Support is at 2090, 2070, and 2040 May, and resistance is at 2130, 2140, and 2170 May. Trends in Sao Paulo are mixed. Support is at 180.00, 178.00, and 177.00 September, and resistance is at 183.00, 185.00, and 187.00 September.

COTTON

General Comments: Futures were mixed to higher Friday. Wire reports that Texas could plant 25% less are to Cotton was very supportive as the state produces half the US crop. Bears still point to increasing certified stocks levels for reasons to be bearish. Economic data from China, the largest importer of Cotton, implied that demand from that buyer could be cut as the economy there is stalling a bit. Demand bulls noted positive exports 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. The plantings intentions report will be released at the end of the month. 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 mostly below normal. Texas will get dry weather. Temperatures will average below normal, but above normal starting Thursday. The USDA spot price is now 79.61 ct/lb. ICE said that certified Cotton stocks are now 0.421 million bales, from 0.405 million yesterday. ICE said that 5 contracts were delivered yesterday and that total deliveries for the month are 1,475 contracts.

Chart Trends: Trends in Cotton are up with objectives of 86.40 and 89.00 May. Support is at 84.00, 83.80, and 83.10 May, with resistance of 86.00, 86.30, and 87.50 May.

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