Cocoa mixed as fundamentals show weakness

COCOA        

General Comments:  Futures closed mixed, with New York generally a little higher and London generally a little lower.  The European grind data was less than last year and hurt the price action yesterday.  After the close, the U.S. data was announced and showed increased demand from last year and should support higher values today.  Chart patterns suggest further rallies could be coming and fundamentals for the short term could support the charts as demand seems to be better than trade expectations.  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 4.719 million bags. ICE said 0 delivery notices were posted against May contracts today and that total deliveries are now 727 contracts.  The US Cocoa grind was 125,887 tons in the first quarter, from 119,022 tons last year.  LIFFE stocks are now 6,439 standard units, 137 large units, and 7 bulk units.

Chart Trends:  Trends in New York are mixed to 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.

COTTON

General Comments:  Futures were lower as traders responded more to news that China was releasing state reserves built up over the last two years for purchase by mills tan to the strong export sales report.  Rains are moving through the Delta and Southeast today to slow planting progress.  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 rains and storms today and a dry weekend.  Temperatures will average near to below normal, but near to above normal by Monday.  Texas will get dry weather, but a few showers could appear in northern areas on Monday.  Temperatures will average near to below normal today, and then will trend to ear to above normal by Monday.  The USDA spot price is now 80.24 ct/lb.  ICE said that certified Cotton stocks are now 0.487 million bales, from 0.477 million yesterday.  

Chart Trends:  Trends in Cotton are mixed.  Support is at 83.00, 82.60, and 81.40 May, with resistance of 85.40, 86.20, and 86.50 May

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