Sugar falls as traders look for large inventory injection

SUGAR

General Comments: Futures closed a little lower in consolidation trading. Many are still saying that big supplies are coming to the market. Chart trends in London and New York are mostly up, but the bulls have not been able to push New York prices above 1900 May, at least not yet. Ample offers seem to appear above that level. Futures seem to uncover new consumptive demand every time the market moves below 1800 in New York. Reports indicate that the Chinese have been using price weakness to buy more Sugar than the trade had anticipated. Brazil will start to offer a little less as mills there prepare for greater domestic Ethanol demand as blends for cars have been changed by the government. Reports from Brazil say that the new crop production looks to be strong, so the diversion into more domestic ethanol use will help offset increased sugarcane production. Exports from Brazil continue to be very strong. Exports from other countries are said to be less than expected.

Overnight News: Mostly dry weather expected in Brazil. Temperatures should be near to above normal. Brazil produced 34.09 million tons of Sugar through February, up 8.9% from last year.

Chart Trends: Trends in New York are mixed to up with objectives of 1900 and 1990 May. Support is at 1850, 1835, and 1815 May, and resistance is at 1900, 1920, and 1940 May. Trends in London are up with objectives of 543.00 and 576.00 May. Support is at 531.00, 529.00, and 527.00 May, and resistance is at 540.00, 541.00, and 544.00 May.

COTTON

General Comments: Futures were higher again yesterday on reports of tight domestic and world cash markets. Demand is still said to be strong, but some buyers are backing away from the market after the rally in prices. New export demand data will be released tomorrow by USDA. The rally is coming at a time when certified stocks are building as well. The current low new crop prices are bringing into question what farmers in Texas and the Delta and Southeast will plant this year. Some 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, with warmest readings in the Delta. Texas will get dry weather. Temperatures will average above normal. The USDA spot price is now 83.26 ct/lb. ICE said that certified Cotton stocks are now 0.426 million bales, from 0.424 million yesterday. ICE said that 0 contracts were delivered yesterday and that total deliveries for the month are 1,542 contracts. USDA said that net Upland Cotton export sales were 187,600 bales this year and40,500 bales next year. Net Pima sales were 44,900 bales this year and 9,800 bales next year.

Chart Trends: Trends in Cotton are up with objectives of 90.80 and 93.90 May. Support is at 88.80, 86.10, and 85.80 May, with resistance of 89.20, 90.00, and 90.70 May.

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