Coffee falls as look to Brazil, discount rust in Central America

COFFEE

General Comments: Futures were a little lower as traders move out of May positions before the deliveries start in the next couple of weeks. Ideas are that supplies are good for now and can only increase down the road. 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. Rains have increased in Vietnam and crop conditions have improved. 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 2.749 million bags. The ICO composite price is now 128.85 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. A few showers are posible in northern Central America and southeastern Mexico. Temperatures should average near to above normal.

Chart Trends: Trends in New York are mixed. Support is at 135.00, 134.00, and 132.00 May, and resistance is at 141.00, 144.00, and 147.00 May. Trends in London are down with objectives of 1990, 1980, and 1955 May. Support is at 1970, 1950, and 1915 May, and resistance is at 2030, 2045, and 2060 May. Trends in Sao Paulo are mixed. Support is at 168.00, 166.00, and 163.00 September, and resistance is at 174.00, 176.00, and 177.00 September.

COTTON

General Comments: Futures were lower again yesterday on reports of speculator and commercial long liquidation. Ideas of weaker demand are surfacing after the recent rally, and ideas are that the selling will continue for the rest of the week. Some traders think that US planted area will increase from the estimates released at the end of March due to more favorable Cotton futures prices and sinking Corn and Soybeans futures prices. Weather will 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, but export demand is a little less lately.

Overnight News: The Delta and Southeast will see mostly dry weather except for rain Wednesday and Thursday. Temperatures will trend to below normal this week. Texas will get dry weather. Temperatures will average near to below normal this week but will warm up again this weekend. The USDA spot price is now 80.17 ct/lb. ICE said that certified Cotton stocks are now 0.431 million bales, from 0.427 million yesterday.

Chart Trends: Trends in Cotton are down with objectives of 82.00, 78.85, and 74.95 May. Support is at 84.00, 82.60, and 81.40 May, with resistance of 86.10, 87.10, and 87.80 May.

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