Cotton lower after USDA shows slow planting progress

COFFEE

General Comments: Futures were lower on some long liquidation and new selling from speculators. News that the Chinese economy did not show as much growth as anticipated started the selling, and then the selling took on a life of its own, especially in precious metals and the petroleum complex. Agricultural products held much better, although still mostly closed lower. 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. 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 2.757 million bags. The ICO composite price is now 128.01 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 posible in northern Central America and southeastern Mexico late this week. Temperatures should average near to above normal. GCA stocks are now 4.776 million bags, from 4.891 million last month. Vietnam Customs said the country exported 158,000 tons of Coffee in March. Year to date exports are now 864,000 tons, from 760,000 tons last year.

Chart Trends: Trends in New York are mixed. Support is at 132.00, 129.00, and 126.00 May, and resistance is at 136.00, 138.00, and 141.00 May. Trends in London are mixed to up with objectives of 2075 May. Support is at 2010, 1980, and 1970 May, and resistance is at 2045, 2060, and 2080 May. Trends in Sao Paulo are down with objectives of 161.00 September. Support is at 163.00, 160.00, and 157.00 September, and resistance is at 168.00, 171.00, and 174.00 September.

SUGAR

General Comments: Futures closed lower on the massive selling seen from speculators due to weakness in the Chinese economic data. 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 there 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. USDA said that Sugarbeets are now 13% planted, from 38% last year and 17% average.

Chart Trends: Trends in New York are mixed to up with no objectives. Support is at 1760, 1740, and 1710 July, and resistance is at 1800, 1830, and 1850 July. Trends in London are mixed to 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 lower as massive selling was seen in most commodities, and especially precious metals and the petroleum complex. Chart patterns suggest further rallies could be coming and fundamentals for the short term could support the charts. 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 on 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 higher today at 4.760 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 up with objectives of 1490 May. Support is at 1495, 1450, and 1430 May, with resistance at 1520, 1530, and 1555 May.

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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