Coffee higher as disease cuts into Central American crop

COFFEE

General Comments: Futures were higher again Friday on statements from the ICO that Central America could lose 2.5 million bags of Coffee this year and 4.0 million next year due to rust. The crops in Vietnam need rain but have not been getting very much if any, and there is no relief in sight. Producers there say losses could be 25% of the production of last year, and offers from there have started to move lower in volume. Ideas of big supplies, mostly from Brazil, keep the selling alive. Reports of rust in Central America and the production cuts there are still in the press, and 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.

Overnight News: Certified stocks are higher today and are about 2.721 million bags. The ICO composite price is now 134.33 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 were delivered today against March futures and that total deliveries for the month are 108 contracts. Brazil exported 1.94 million bags of Coffee in February, down 2% from last year. Marketing year to date exports are now 20.93 million bags, down 5.2% from last year. LIFFE stocks are now 12,582 lots.

Chart Trends: Trends in New York are mixed. Support is at 140.00, 137.00, and 134.00 May, and resistance is at 145.00, 147.00, and 149.00 May. Trends in London are up with objectives of 2230 May. Support is at 2140, 2130, and 2115 May, and resistance is at 2190, 2205, and 2220 May. Trends in Sao Paulo are mixed. Support is at 177.00, 174.00, and 171.00 September, and resistance is at 183.00, 185.00, and 187.00 September.

COTTON

General Comments: Futures were higher Friday, but closed well off the highs of the day as some profit taking was noted after a sharp rally in response to the USDA reports. USDA showed increased demand and less ending stocks for the US. Meanwhile, demand is still said to be strong even though USDA has made no announcements so far this week. 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, although producers in the Delta are noting the recent price rally and might decide to plant more Cotton 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.

Overnight News: The Delta and Southeast will see dry conditions. Temperatures will average mostly below normal early this week and then near to above normal. Texas will get dry weather. Temperatures will average above normal. The USDA spot price is now 81.45 ct/lb. ICE said that certified Cotton stocks are now 0.415 million bales, from 0.413 million yesterday. ICE said that 0 contracts were delivered yesterday and that total deliveries for the month are 1,542 contracts.

Chart Trends: Trends in Cotton are mixed to up with objectives of 89.00 May. Support is at 86.10, 85.80, and 85.20 May, with resistance of 87.50, 88.70, and 88.90 May.

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