Coffee falls as Brazil harvest nears

FCOJ

General Comments: Futures closed higher as bulls talked of increasing crop losses in Florida due to the greening disease, drought, and cold temperatures that were seen a couple of weeks ago. Greening disease and what it might mean to production prospects continues to be a primary support item. Weather is good for production overall, but more rain is needed. Irrigation is widespread. 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. 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.

Overnight News: Florida weather forecasts call for mostly dry conditions, but some precipitation is likely on Friday. Temperatures will average near to above normal.

Chart Trends: Trends in FCOJ are mixed to up with objectives of 146.00 and 152.00 May. Support is at 138.00, 135.00, and 132.00 May, with resistance at 142.00, 144.00, and 147.00 May.

SUGAR

General Comments: Futures closed mostly lower again 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, and chart patterns continue to look weak. 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. India has produced 23.05 million tons of Sugar so far this marketing yeawr, down 2% from last year.

Chart Trends: Trends in New York are mixed to down with objectives of 1725 and 1610 July. Support is at 1760, 1740, and 1710 July, and resistance is at 1780, 1790, and 1800 July. Trends in London are down with no objectives. Support is at 490.50, 487.00, and 484.00 August, and resistance is at 500.00, 505.00, and 510.00 August.

COCOA

General Comments: Futures closed a little lower in consolidation trading. Charts show that the market is up against some important resistance areas and is preparing for a move one way or another. Chart patterns for now suggest that the next move should be up. The flow of Cocoa from western Africa is falling and traders are taking note. Weather continues good in Africa and as some crop size estimates for next year start to increase. Ideas are that production in the coming year will be short, even with increased production ideas. Some buying has been seen in the next crop months because of these ideas. 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.

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 4.542 million bags.

Chart Trends: Trends in New York are mixed to up with objectives of 2240 and 2370 May. Support is at 2160, 2110, and 2075 May, with resistance at 2190, 2220, and 2235 May. Trends in London are mixed. Support is at 1430, 1420, and 1405 May, with resistance at 1475, 1495, and 1520 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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