Coffee falls further on anticipated Brazil crop size

COFFEE

General Comments: Futures were sharply lower, with London the leader on the way down.  All markets still show signs of completing bottoms.  Prices in general have been weak as traders anticipate another big crop out of Brazil starting the summer, and bears note that improved rains should help increase Vietnamese production potential this year.  Ideas are that supplies are good for now and can only increase down the road as Brazil will soon start to harvest.  Rains continue in Vietnam and crop conditions have improved.  Current crop development is still good this year in Brazil, but it has been dry for the past week.  Production ideas remain big there.  Central America crops are mostly harvested and is too dry for new crop flowering.  Colombia is reported to have good conditions.

Overnight News:  Certified stocks are higher today and are about 2.740 million bags.  ICE delivery notices are 26 contracts today and now total 122 contracts for the month.  The ICO composite price is now 128.57 ct/lb.  Brazil should get mostly dry conditions.  Temperatures will average near to above normal.  Colombia should get scattered showers, and Central America and Mexico should get mostly dry conditions.  Temperatures should average near to above normal.

Chart Trends:  Trends in New York are mixed to up with objectives of 145.00 and 151.00 July.  Support is at 140.00, 137.00, and 134.00 July, and resistance is at 145.00, 147.00, and 150.00 July.  Trends in London are down with objectives of 1950 July.  Support is at 1985, 1970, and 1955 July, and resistance is at 2025, 2035, and 2050 July.  Trends in Sao Paulo are mixed.  Support is at 168.00, 166.00, and 163.00 September, and resistance is at 171.00, 173.00, and 175.00 September.

COTTON

General Comments:  Futures were lower as traders got ready for First Notice Day deliveries today and the weekly export sales report tomorrow.  Planting and growing conditions remain in a state of flux in the US.  Rains are moving through the Delta and Southeast this week to slow planting progress, and it is still cold and dry in the north Texas region.  The showers should move out of the Southeast by tomorrow.  The weather after this week is expected to turn somewhat warmer and drier.  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.  Producers have been active planting depending on the region involved.  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 today and over the weekend.  Temperatures will average below normal this week and near to above normal this weekend.  Texas will get mostly dry weather, but a few showers are possible on Friday.  Temperatures will trend to near normal by Friday and above normal over the weekend.  The USDA spot price is now 80.11 ct/lb.  ICE said that certified Cotton stocks are now 0.498 million bales, from 0.487 million yesterday.  ICE said that delivery notices were 122 contracts today and now total 122 contracts for the month.  

Chart Trends:  Trends in Cotton are mixed.  Support is at 84.00, 83.30, and 82.20 May, with resistance of 86.20, 86.60, and 87.50 May.

Next page: Orange Juice, Sugar and Cocoa

About the Author

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.

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