Sugar upside limited by abundant inventories

FCOJ

General Comments: Futures closed higher on speculative buying. Short term trends turned down with the price action on Friday, but prices were able to climb back to the trading range yesterday. It was a cold weekend in Florida, and frosts were possible over the weekend. Some areas could have seen a freeze. Temperatures had been warm in the state until the weekend, and conditions are dry, and talk about the potential for more fruit drop and poor development of the crop for next year returned. Crop development is reported to be far enough along that some damage or loss is possible. Some buds could have been lost and that will mean less production potential for next year if the loss is confirmed. Harvest in Florida of mid and early oranges is almost over, and the Valencia harvest is underway. Bloom has been reported in groves in all production areas of the state. Brazil is seeing near to above normal temperatures and light showers and could use more rain. ICE said that 0 notices were posted against March contracts and that total deliveries for the month are 0 contracts.

Overnight News: Florida weather forecasts call for mostly dry conditions. Temperatures will average below normal.

Chart Trends: Trends in FCOJ are mixed to down with objectives of 117.00 and 109.00 May. Support is at 120.00, 118.00, and 115.00 May, with resistance at 125.00, 129.00, and 132.00 May.

COFFEE

General Comments: Futures were higher yesterday and short term trends turned up on the charts. Speculators bought and some stop loss orders were hit on the way up. It still seems that New York is trying to form a low in this area, and it might have completed a low yesterday. 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. Central America could lose at least 20% of the total crop this 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. Central America crops are mostly harvested. Colombia is reported to have good conditions. Colombian truckers ended their strike today as their demands were negotiated by the government.

Overnight News: Certified stocks are higher today and are about 2.696 million bags. The ICO composite price is now 135.30 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 0 contracts was delivered today against March futures and that total deliveries for the month are 102 contracts.

Chart Trends: Trends in New York are mixed to up with objectives of 147.00, 152.00, and 160.00 May. Support is at 142.50, 141.00, and 137.00 May, and resistance is at 147.00, 149.00, and 153.00 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 to up with objectives of 187.00 and 193.00 September. Support is at 181.00, 180.00, and 177.00 September, and resistance is at 185.00, 187.00, and 189.00 September.

COCOA

General Comments: Futures closed lower again yesterday on follow through selling and on ideas of big supplies available to the market. Market trends are still down overall, but futures are within about 100 dollars of a potential swing low based on the charts. Ideas are that current low prices should créate new demand and that the main crop harvest is over in Western Africa and much of Asia so that supplies on offer could also be less. The weather is forecast to be warm and dry in West Africa this week. For now, traders expect good mid crop production from West Africa, but thios could change if hot wquinds develop in the short term. Malaysia and Indonesia crops appear to be in good condition and weather is called favorable. Traders are starting to look ahead and past the midcrop harvest and note that the market could move to a production déficit 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 0 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 4.392 million bags.

Chart Trends: Trends in New York are down with objectives of 2050, 2020, and 1990 May. Support is at 2050, 2020, and 2000 May, with resistance at 2100, 2110, and 2130 May. Trends in London are down with objectives of 1390 and 1365 May. Support is at 1360, 1330, and 1300 May, with resistance at 1405, 1435, and 1450 May.

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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