Coffee falls as Brazil harvest nears

COFFEE

General Comments: Futures were lower across the board as traders anticipated increased offers from Brazil. The new Brazilian harvest is just a couple of months away, and traders expect big offers to develop on rallies. No one is paying much attention to the reports of rust in Central America and parts of South America and prefer to concentrate on Brazil and also on improving production conditions in Vietnam. Arabica prices had rallied from the lows as traders look at the potential for major losses in producing areas due to the rust. 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 there are showers around. Production ideas remain big there. Central America crops are mostly harvested. Colombia is reported to have good conditions.

Overnight News: Certified stocks are lower today and are about 2.738 million bags. The ICO composite price is now 129.40 ct/lb. Brazil should get scattered showers. 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. The ICO said that world Coffee exports were 8.63 million bags in February, down 11% from the previous year. Year to date exports are now 46.49 million bags, from 42.41 million in 2011-12.

Chart Trends: Trends in New York are mixed. Support is at 136.00, 134.00, and 132.00 May, and resistance is at 139.00, 141.00, and 144.00 May. Trends in London are down with objectives of 2020 and 1990 May. Support is at 2015, 2000, and 1970 May, and resistance is at 2060, 2080, and 2100 May. Trends in Sao Paulo are mixed. Support is at 168.00, 166.00, and 165.00 September, and resistance is at 173.00, 177.00, and 180.00 September.

COTTON

General Comments: Futures were higher on ideas that more Chinese demand is coming, but gave back some gains on ideas that USDA was too low in its acreage projections for plantings in the coming year. China is buying a lot of Cotton from its producers at high prices, and this leaves industry there to import. Most of those imports come from the US. Some traders think that US planted area will increase from the estimates released last week due to more favorable Cotton futures prices and sinking Corn and Soybeans futures prices. Weather will also be watched as more wet weather in the Delta and Southeast could create less interest in Corn and more in Cotton to avoid having Corn pollinate in the hottest time of the year. 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 exports have held up well given the price strength in recent weeks.

Overnight News: The Delta and Southeast will see mostly dry weather except for rain over the next couple of days. Temperatures will average below normal this week and near to above normal this weekend. Texas will get dry weather except for a few showers today. Temperatures will average near to above normal by Friday. The USDA spot price is now 83.94 ct/lb. ICE said that certified Cotton stocks are now 0.424 million bales, from 0.418 million yesterday.

Chart Trends: Trends in Cotton are mixed. Support is at 87.10, 86.20, and 85.60 May, with resistance of 89.80, 90.25, and 90.45 May.

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