Cotton rises on strong exports, tight markets

COFFEE

General Comments: Futures were lower again Friday in New York and Sao Paulo, but higher in London. Talk of a big offseason crop coming this year in Brazil kept ideas that there will be a lot of Coffee for buyers around. Brazil has Coffee to sell, but production in other countries is more problematical. Brazil offers are not very strong right now, but it is the threat of increased sales that helps keep prices under pressure. Reports of rust in Central America and the production cuts that it are still in the press. Central American losses next year could be 30% or more of the crop. The ICO said recently that the region has already lost 2.5 million bags from the production this year. Current crop development is still good this year in Brazil, and production areas are getting drier weather for the developing crop, although there are a few showers around. There is some talk the drier weather could stress trees. Production ideas remain big there. Central America crops are mostly harvested. Colombia is reported to have good conditions, but some now talk of less than expected production.

Overnight News: Certified stocks are higher today and are about 2.743 million bags. The ICO composite price is now 131.25 ct/lb. Brazil should get scattered showers. Temperatures will average near 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 5 contracts were delivered today against March futures and that total deliveries for the month are 118 contracts. GCA stocks are now 4.891 million bags, from 4.775 million at the end of January.

Chart Trends: Trends in New York are down with objectives of 125.00 and 108.00 May. Support is at 137.00, 134.00, and 131.00 May, and resistance is at 142.00, 145.00, and 147.00 May. Trends in London are mixed to up with objectives of 2230 May. Support is at 2160, 2140, and 2130 May, and resistance is at 2200, 2220, and 2250 May. Trends in Sao Paulo are down with objectives of 169.00 and 161.00 May. Support is at 171.00, 168.00, and 165.00 September, and resistance is at 177.00, 180.00, and 183.00 September.

SUGAR

General Comments: Futures closed a little higher in consolidation trading. The market is congesting for another move, and for now the congestion area looks as much like a bull flag as anything. 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: Scattered showers are expected in Brazil. Temperatures should be near normal.

Chart Trends: Trends in New York are mixed to up with objectives of 1900 and 1990 May. Support is at 1865, 1850, and 1835 May, and resistance is at 1920, 1940, and 1970 May. Trends in London are mixed to up with objectives of 549.00, 560.00, and 576.00 May. Support is at 536.00, 531.00, and 529.00 May, and resistance is at 544.00, 545.00, and 547.00 May.

COCOA

General Comments: Futures closed a little lower. 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 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 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: Scattered showers are expected in West Africa. Temperatures will average mostly above normal. Malaysia and Indonesia should see episodes of isolated showers. Temperatures should average near normal. Brazil will get mostly dry conditions and warm temperatures. ICE certified stocks are lower today at 4.448 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 mixed. Support is at 1405, 1385, and 1370 May, with resistance at 1455, 1475, and 1495 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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