Sugar upside limited by abundant inventories

SUGAR

General Comments: Futures closed higher in New York, and in London. Once again, New York futures could not move decisively below 1800. It seems that demand for White Sugar is good right now and that has supported London for now, but the overall supply of Sugar is big so the support has been limited. Chart trends in London and New York are now mixed. Big supplies of Sugarcane and Raw Sugar keep price trends in check, and the market remains in a sideways trend even though trends are trying to turn up. Brazil said it will increase the ethanol in its gasoline blends in May, and this could help work off a lot of the surplus production in Brazil and could tighten world balance sheets. Production has been strong in Brazil so far this year, and reports say that the new crop production looks to be strong as well, so the diversion into more domestic ethanol use will help. Exports from Brazil continue to be very strong. Chart patterns now show that a rally is possible, with London likely to be the leader in any rally attempt.

Overnight News: Mostly dry weather expected in Brazil. Temperatures should be near to above normal.

Chart Trends: Trends in New York are mixed. Support is at 1790, 1770, and 1740 May, and resistance is at 1860, 1875, and 1900 May. Trends in London are mixed. Support is at 513.00, 512.00, and 506.00 May, and resistance is at 520.00, 523.00, and 527.00 May.

COTTON

General Comments: Futures were higher again yesterday on talk of strong export demand. No new deals were confirmed, but talk indicates that the buying was active over the weekend. Ideas of less planted area also supported Cotton futures again, but most of the talk was of the new demand. 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. Delta and Southeast areas will see mostly dry weather.

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 80.36 ct/lb. ICE said that certified Cotton stocks are now 0.421 million bales, from 0.405 million yesterday. ICE said that 6 contracts were delivered yesterday and that total deliveries for the month are 1,481 contracts.

Chart Trends: Trends in Cotton are up with objectives of 89.00 May. Support is at 85.20, 84.00, and 83.80 May, with resistance of 87.50, 88.90, and 89.20 May.

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