Sugar falls on expectations of big production

FCOJ

General Comments: Futures closed mixed. May was a little weaker s traders start to roll out of positions before the deliveries start, but July and September were firm 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 below 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 135.00, 132.00, and 131.00 May, with resistance at 140.00, 142.00, and 144.00 May.

COFFEE

General Comments: Futures were higher across the board as New York rallied and pulled the other markets higher. Traders noted decreased exports from Guatemala because of the rust, and also the marketing loan program modifications from the Brazil government that will make it easier for producers there to hold old and new crop supplies off the market. Guatemala March exports were down 17% from March of last year. The new Brazilian harvest is just a couple of months away, and traders expected big offers to develop on rallies. No one had been 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. But the decreased exports from Central America as seen with the data from Guatemala yesterday changed some ideas, and chart patterns also show the potential for a low to be developing. 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 higher today and are about 2.743 million bags. The ICO composite price is now 131.66 ct/lb. Brazil should get scattered showers. Temperatures will average near to below 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 136.00, 134.00, and 132.00 May, and resistance is at 139.00, 141.00, and 144.00 May. Trends in London are mixed to down with objectives of 1990 May. Support is at 2015, 1995, and 1970 May, and resistance is at 2060, 2080, and 2100 May. Trends in Sao Paulo are mixed to up with objectives of 179.00, 186.00, and 187.00 September. Support is at 170.00, 168.00, and 166.00 September, and resistance is at 176.00, 177.00, and 180.00 September.

COCOA

General Comments: Futures closed lower on what was called speculative selling. Charts show that the market may have failed against some important resistance areas. The flow of Cocoa from western Africa is falling and traders are taking note. Weather continues to be 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, and wire reports said that the harvest started this week in Nigeria. 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 higher today at 4.6368 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 1430, 1410, and 1400 May, with resistance at 1480, 1495, and 1520 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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