Coffee moves higher after possible bottom

FCOJ

General Comments:  Futures closed higher as traders continue to look for reduced production in Florida this year.  Some good rains were seen in the state over the weekend, but crought conditions persist overall.  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, although light precipitation is possible this weekend.  Temperatures will average near to above normal.

Chart Trends:  Trends in FCOJ are mixed to down with objectives.  Support is at 148.00, 144.00, and 141.00 May, with resistance at 155.00, 158.00, and 161.00 May.

SUGAR        

General Comments:  Futures closed higher as the selling seen in outside markets on Monday was not present yesterday.  Traders are keeping an eye on developments in Brazil  Talk that rain in production areas last week was hurting harvest progress was bullish, but the weather there is drier this week.  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.  Chart patterns are sideways for the short term.  Reports indicate that Brazil will start harvesting this 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 mixed.  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 510.00, 513.00, and 516.00 August.

COCOA        

General Comments:  Futures closed higher and made a break out to the upside after several months of range trading.  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.  Ideas are that production in West Africa could be less next crop year as well.  Demand remains a big problem, with analysts looking for lower grind data from Europe when the data is released today.  The mid crop harvest is underway, and less than expected production along with smaller beans is reported.  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 4.747 million bags. Ivory Coast arrivals are now estimated at 1.064 million tons, from 1.066 million last year.  ICE said 690 delivery notices were posted against May contracts today and that total deliveries are now 690 contracts.  The European Cocoa Association said that the European first quarter grind was 339,377 tons, down 3.9% from last year.

Chart Trends:  Trends in New York are up with objectives of 2370 and 2530 July.  Support is at 2275, 2255, and 2220 July, with resistance at 2330, 2350, and 2385 July.  Trends in London are up with objectives of 1580 and 1670 July.  Support is at 1490, 1455, and 1430 July, with resistance at 1560, 1570, and 1590 July.

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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