Orange juice rises on USDA production estimate cut

COFFEE

General Comments: Futures were lower on some long liquidation and new selling from speculators. News that the Brazil government will look to raise the minimum price paid to farmers by 30% in an effort to raise prices was part of the market and did not support prices on Friday as it had earlier in the week. It said it was considering the use of options or direct subsidies to farmers for support. Prices in general have been weak as traders anticipate another big crop out of Brazil starting the Summer and as traders move out of May positions before the deliveries start. 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. That is because the Central American losses appear to be made up by bigger production in other countries, including Brazil. 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 slightly lower today and are about 2.755 million bags. The ICO composite price is now 128.82 ct/lb. Brazil should get mostly dry conditions. 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 possible 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 138.00, 141.00, and 144.00 May. Trends in London are mixed to up with objectives of 2075 May. Support is at 2015, 1980, and 1970 May, and resistance is at 2045, 2060, and 2080 May. Trends in Sao Paulo are mixed. Support is at 168.00, 166.00, and 163.00 September, and resistance is at 171.00, 174.00, and 176.00 September.

SUGAR

General Comments: Futures closed higher and trends turned up on the charts. 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. Talk that rain in production areas was hurting harvest progress was bullish. Most traders remain bearish longer term on ideas that big production will be available to the market as the Brazil harvest is processed and comes to market. Traders know that ther might be less production in India and Thailand, but expect Brazil to produce enough to cover any losses. 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: Mostly dry conditions are expected in Brazil. Temperatures should average near to above normal.

Chart Trends: Trends in New York are up with no objectives. Support is at 1790, 1760, and 1740 July, and resistance is at 1830, 1850, and 1860 July. Trends in London are up with objectives of 511.00 August. Support is at 496.00, 494.00, and 491.00 August, and resistance is at 505.00, 510.00, and 513.00 August.

COCOA

General Comments: Futures closed higher as traders wait for the mid-crop harvest in western Africa. Chart patterns 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 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 sharply higher today at 4.748 million bags.

Chart Trends: Trends in New York are up with objectives of 2370 May. Support is at 2220, 2200, and 2170 May, with resistance at 2285, 2330, and 2380 May. Trends in London are mixed to up with objectives of 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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