Cocoa looks for low prices to cure low prices

COCOA

General Comments: Futures closed a little lower. Ideas are that current low prices should create 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 somewhat wet in West Africa this week. For now, traders expect good mid-crop production from West Africa. 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 deficit next year. More buying is being noted in deferred months at this time due to smaller production ideas for the coming crops.

Overnight News: Scattered showers are expected in West Africa. Temperatures will average mostly 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 840 contracts. ICE certified stocks are lower today at 4.346 million bags.

Chart Trends: Trends in New York are mixed to up with no objectives. Support is at 2110, 2085, and 2055 May, with resistance at 2155, 2175, and 2190 May. Trends in London are up with objectives of 1490 and 1565 May. Support is at 1435, 1405, and 1385 May, with resistance at 1455, 1475, and 1495 May.

COTTON

General Comments: Futures were higher again yesterday in response to the strong export paces seen in the USDA reports yesterday and on reports of tight domestic and world cash markets. Demand is still said to be strong, and sales for export have held up well given the price strength in recent weeks. 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 85.58 ct/lb. ICE said that certified Cotton stocks are now 0.420 million bales, from 0.426 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 up with objectives of 93.90 May. Support is at 90.00, 89.20, and 88.80 May, with resistance of 91.50, 91.60, and 92.00 May.

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