Coffee factors potential major losses from disease

FCOJ

General Comments: Futures closed near unchanged in very quiet trading. It was mostly a consolidation trade again. Greening disease and what it might mean to production prospects continues to be a primary support item. Forecasts calling for colder temperatures through the end of the month provided some buying interest. Temperatures are warm in the state, and conditions are dry, and talk about the potential for more fruit drop and poor development of the crop for next year continues. Harvest in Florida of mid and early oranges is over, and the Valencia harvest is continuing. Bloom has been reported in groves in all production areas of the state. Brazil is seeing near to above normal temperatures and scattered showers. Drier weather is expected this weekend.

Overnight News: Florida weather forecasts call for mostly dry conditions. Temperatures will average below normal this week, but will trend warmer this weekend. Cold temperatures were reported in parts of Florida overnight and some frost could have developed on buds and flowers.

Chart Trends: Trends in FCOJ are mixed. Support is at 134.00, 132.00, and 124.00 May, with resistance at 140.00, 141.00, and 144.00 May.

SUGAR

General Comments: Futures closed lower on ideas of big production, mostly from Brazil. Ideas of weak demand and big supplies keep traders negative to prices. The market could be starting a new trend down. Futures seem to uncover new consumptive demand every time the market moves below 1800 in New York and plenty of offers when a rally is made, but so far no new demand is being reported. Reports indicate that Brazil will start harvesting next month and that a big offer is expected. 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 overall despite the port problems.

Overnight News: Scattered showers are expected in Brazil through Friday, then drier weather is likely.

Chart Trends: Trends in New York are down with objectives of 1750 and 1700 May. Support is at 1780, 1750, and 1720 May, and resistance is at 1810, 1830, and 1850 May. Trends in London are down with objectives of 511.00 and 507.00 May. Support is at 513.00, 510.00, and 501.00 May, and resistance is at 518.00, 523.00, and 525.00 May.

COCOA

General Comments: Futures closed higher on reports of smaller offers from producing countries, mostly from Ivory Coast. Weather continues good in Africa and as some crop size estimates for next year start to increase. Ideas that production in the coming year will be short overall helped the bulls. The market is trying to mount a seasonal rally now that the main harvest is over in Western Africa. 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 sharply higher today at 4.617 million bags.

Chart Trends: Trends in New York are mixed. Support is at 2110, 2075, and 2035 May, with resistance at 2190, 2220, and 2235 May. Trends in London are mixed. Support is at 1420, 1405, and 1380 May, with resistance at 1465, 1475, and 1495 May.

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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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