Cotton plantings watched as grain prices sink

Weather the watch word

Chart Trends: Trends in New York are mixed to up with objectives of 145.00 and 151.00 July. Support is at 137.00, 134.00, and 131.00 July, and resistance is at 142.00, 145.00, and 147.00 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.

SUGAR

General Comments: Futures closed lower and broke down out of the trading range. Traders remain bearish on supplies, and this has hurt New York prices. London traders note that the spread between the two markets makes sugar processing profitable and that white sugar supplies should be large as well. However, London prices are holding better than those in New York for now. Traders are keeping an eye on developments in Brazil and expect big production as the harvest moves forward. Brazil mills could concentrate on ethanol production first and sugar production second, and that could create some short term shortages for the market. Chart patterns are turning down for the short term.  

Overnight News: Mostly dry conditions are expected in Brazil. Temperatures should average near to above normal.  

Chart Trends: Trends in New York are down with objectives of 1725 and 1610 July. Support is at 1710, 1680, and 1650 July, and resistance is at 1760, 1780, and 1800 July. Trends in London are mixed to down with objectives of 486.00 and 481.00 August. Support is at 496.00, 494.00, and 491.00 August, and resistance is at 508.00, 513.00, and 516.00 August.

COCOA

General Comments: Futures closed little changed in consolidation trading. Chart patterns suggest further rallies could be coming and fundamentals for the short term could support the charts as demand has been better than trade expectations. But, short term charts show that a small top could be developing that might lead to a correction before any further rallies. The flow of Cocoa from western Africa is less, 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 despite the improved weather as farmers have not liked offered prices.  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 4.714 million bags. ICE said 0 delivery notices were posted against May contracts today and that total deliveries are now 727 contracts. 

Chart Trends: Trends in New York are mixed to up with objectives of 2370 and 2530 July. Support is at 2295, 2275, and 2255 July, with resistance at 2350, 2385, and 2400 July.  Trends in London are mixed to up with objectives of 1580 and 1670 July. Support is at 1535, 1525, and 1490 July, with resistance at 1570, 1590, and 1610 July.

Notes:

DJ Asian Cocoa Grindings Fell 10.8% in the First Quarter

Asian grindings fell 10.8% on the year in the first three months of 2013, to 140,062 metric tons, the Cocoa Association of Asia said on Wednesday.

Cocoa grindings, a measurement of the amount of beans processed, are viewed as a barometer of chocolate demand by the industry.

Cocoa grindings in the first quarter of 2012 totaled 157,000 metric tons, according to the industry group, whose members include Olam International Ltd. (O32.SG), as well as units of Nestle SA (NESN.VX), Barry Callebaut AG (BARN.EB) and Hershey Co. (HSY), according to its website. The figures reflect cocoa grinding in Malaysia, Singapore and Indonesia.

First-quarter cocoa grindings in North America, reported last week, rose unexpectedly by 5.8%, and fell 3.9% in Europe, the world's biggest per capita chocolate-consuming region.

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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