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

FCOJ

General Comments: Futures closed higher as traders prepared for the USDA production reports today. Ideas are that USDA could drop production estimates by another 1.0 million boxes in its reports this week. 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, even with some rains late last week. 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. 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 up with objectives of 152.00 May. Support is at 142.00, 140.00, and 135.00 May, with resistance at 150.00, 153.00, and 156.00 May.

SUGAR

General Comments: Futures closed mixed to a little lower in consolidation trading. Nearby months were a little higher in New York on ideas of more logistical problems in Brazil and on reports of slow shipments from there. Most traders remain bearish on ideas that big production will be available to the market as the Brazil harvest is processed and comes to market. 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 in a new down trend. 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. Temperatures should average near to above normal. ICE said that 394 delivery notices were made against May contracts of Sugar 16.

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 1790, 1800, and 1810 July. Trends in London are mixed to down with objectives of 486.00 and 481.00 August. Support is at 487.00, 484.00, and 481.00 August, and resistance is at 496.00, 500.00, and 505.00 August.

COCOA

General Comments: Futures closed higher again as traders wait for the mid-crop harvest in western Africa. The flow of Cocoa from western Africa is weaker, and traders wonder about the quality and size of the mid-crop after some hot and dry weather during the growing season. However, weather has improved in western Africa lately with more rain and somewhat cooler temperatures. Demand remains a big problem, with analysts looking for lower grind data from Europe when the data is released next Wednesday. For now, traders expect mid-crop production from West Africa to hit the market soon, 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 near to 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 4.620 million bags.

Chart Trends: Trends in New York are up with objectives of 2240 and 2370 May. Support is at 2170, 2140, and 2110 May, with resistance at 2220, 2260, and 2285 May. Trends in London are mixed to up with objectives of 1400, 1490, and 1565 May. Support is at 1450, 1430, and 1410 May, with resistance at 1495, 1520, and 1550 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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