Sugar falls on expectations of big production

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. Traders know that there might be less production in India and Thailand, but expect Brazil to produce enough to cover any losses. 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. 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 year, 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.

COTTON

General Comments: Futures were a little higher in consolidation trading. Traders expected bullish export sales data from USDA today. 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. Corn and Soybeans futures could show some stability for the short term after the dramatic price action over the last week. 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 in northern areas this weekend. Temperatures will average near to above normal by Friday and above normal this weekend. The USDA spot price is now 84.34 ct/lb. ICE said that certified Cotton stocks are now 0.421 million bales, from 0.422 million yesterday. Informa estimated US Cotton planted area at 10.367 million acres. USDA said that net Upland Cotton export sales were 148,300 bales this year and 59,300 bales next year. Net Pima sales were 19,800 bales this year and 4,900 bales next year.

Chart Trends: Trends in Cotton are mixed. Support is at 88.60, 87.10, and 86.20 May, with resistance of 89.80, 90.25, and 90.45 May.

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