Sugar falls on increasing production, weak demand

SUGAR

General Comments: Futures closed mostly 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. So far, no new demand is being reported as prices work well below that level this week. 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 no objectives. Support is at 501.00, 499.00, and 493.00 May, and resistance is at 513.00, 518.00, and 523.00 May.

COTTON

General Comments: Futures were higher as traders look for USDA to forecast less planted area in the reports it will release later this morning. Ideas are that the reports would indicate the possibility of tight supplies in the US by the end of the next marketing year. There were also reports of increased mill interest for Cotton here in the US due in part to the positive US economic data that was released this week. Demand ideas remain strong overall based on the strong export paces seen in the USDA reports in recent weeks 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. Some producers in the Delta are noting the recent price rally and might decide to plant more Cotton this year.

Overnight News: The Delta and Southeast will see mostly dry weather until a few showers appear over the weekend. Temperatures will average below normal, but will trend warmer this weekend. Texas will get dry weather except for a few showers on Saturday. Temperatures will average near to below normal this week and near to above normal this weekend. The USDA spot price is now 83.34 ct/lb. ICE said that certified Cotton stocks are now 0.427 million bales, from 0.426 million yesterday.

Chart Trends: Trends in Cotton are mixed. Support is at 87.40, 86.20, and 85.60 May, with resistance of 89.10, 89.80, and 90.45 May.

Next page: Orange juice, Coffee and Cocoa

FCOJ

General Comments: Futures closed near lower in very quiet trading. Prices acted weak as futures could not challenge strong resistance areas not that far away. 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.

COFFEE

General Comments: Futures were lower in all three markets, with London the leader. Arabica prices rallied from the lows as traders look at the potential for major losses in producing areas due to the rust. London prices were lower on reports of strong exports from Vietnam and beneficial rains. 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 producers are holding crops for now and are waiting for higher prices before selling, or else some government support via a marketing program. Reports of rust in Central America and the production cuts that it are still in the press, and major crop losses are being estimated by traders and producers. 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.

Overnight News: Certified stocks are a little lower today and are about 2.739 million bags. The ICO composite price is now 129.43 ct/lb. Brazil should get scattered showers through Friday, then drier weather. Temperatures will average near to above normal. Colombia should get a few showers, and Central America and Mexico should get mostly dry conditions. Temperatures should average near to above normal.

Chart Trends: Trends in New York are mixed. Support is at 134.00, 131.00, and 128.00 May, and resistance is at 138.00, 140.00, and 141.00 May. Trends in London are down with objectives of 2020 and 1990 May. Support is at 2045, 2015, and 2000 May, and resistance is at 2080, 2100, and 2130 May. Trends in Sao Paulo are mixed. Support is at 165.00, 162.00, and 159.00 September, and resistance is at 173.00, 177.00, and 180.00 September.

COCOA

General Comments: Futures closed a little 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 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 isolated showers. Temperatures should average near normal. Brazil will get mostly dry conditions and warm temperatures. ICE certified stocks are lower today at 4.610 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.

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.

Comments
comments powered by Disqus
Check out Futures Magazine - Polls on LockerDome on LockerDome