Coffee gains as Brazil attempts to raise prices

COTTON

General Comments: Futures were higher yesterday in reaction to the USDA reports. The domestic estimates featured slightly more production, but more demand as well to keep the ending stocks estimates unchanged. World data showed increased ending stocks estimates, but only due to the Chinese government stockpiling. Ending stocks estimates for the rest of the world were actually lower, and this provided a lot of the reason to buy futures. Ideas are that Cotton prices will now hold strong for a while due to the estimates released yesterday. 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 today. Temperatures will trend to below normal this week and will turn warmer this weekend. 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 80.91 ct/lb. ICE said that certified Cotton stocks are now 0.441 million bales, from 0.431 million yesterday. USDA said that net Upland Cotton export sales were 147,100 bales this year and 17,300 bales next year. Net Pima sales were 5,600 bales this year and 0 bales next year.

Chart Trends: Trends in Cotton are mixed to down with objectives of 82.00, 78.85, and 74.95 May. Support is at 84.40, 84.00, and 82.60 May, with resistance of 86.10, 86.50, and 87.10 May.

FCOJ

General Comments: Futures closed a little lower in reaction to the USDA production reports that met expectations. USDA dropped production estimates by another 1.0 million boxes in its reports as expected by the trade. 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 mixed to up with no objectives. Support is at 144.00, 142.00, and 140.00 May, with resistance at 152.00, 153.00, and 156.00 May.

COCOA

General Comments: Futures closed mixed as traders wait for the mid crop harvest in western Africa. It was mostly a consolidation trade yesterday, but chart patteerns suggest further rallies could be coming. 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 temperaturas. Demand remains a big problema, 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 4.614 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.

<< Page 2 of 2
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.

Comments
comments powered by Disqus
Check out Futures Magazine - Polls on LockerDome on LockerDome