Coffee finds support in Vietnam production questions

FCOJ

General Comments: Futures closed lower at the end of a big range trading session that saw prices much higher in the early trading. It was a disappointing close for the bulls. Traders are wrestling with more reports of losses from greening disease on the one side and beneficial rains that have hit the state and are expected to hit the state later this week on the other hand. The growing conditions in Florida are expected to improve with the rains. Greening disease and what it might mean to production prospects continues to be a primary support item. Irrigation is widespread, even with recent rains. Temperatures are warm in the state. The Valencia harvest is continuing. Brazil is seeing near to above normal temperatures and dry weather.

Overnight News: Florida weather forecasts call for scattered showers. Temperatures will average near to above normal. ICE said that 0 delivery notices were posted today and that total deliveries for the month are 0 contracts.

Chart Trends: Trends in FCOJ are mixed. Support is at 139.00, 137.00, and 135.00 May, with resistance at 146.50, 147.50, and 150.50 May.

SUGAR   

General Comments: Futures closed higher as bears closed out short positions. Charts show that the market has rejected a chance to move lower, and this is what prompted the buying yesterday. Traders remain bearish on supplies, especially from Brazil, and this has hurt New York prices. The ISO is still calling for a production surplus of up to 8.5 million tons this year. 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. Sugar producers in Russia said that the planting pace has turned slow there as producers wrestle with high costs of production against falling domestic and world prices. Chart patterns are mixed for the short term.

Overnight News: Mostly dry conditions are expected in Brazil. Temperatures should average near to above normal. ICE deliveries were 28,210 contracts, but over half were taken by Cargill.

Chart Trends: Trends in New York are mixed. Support is at 1750, 1725, and 1710 July, and resistance is at 1780, 1800, and 1835 July. Trends in London are mixed. Support is at 502.00, 497.00, and 496.00 August, and resistance is at 510.00, 513.00, and 516.00 August.

COCOA   

General Comments: Futures closed higher in recovery trading and a weaker US Dollar. Chart patterns suggest further rallies could be coming down the road and demand has been better than trade expectations. The flow of Cocoa from western Africa is down for seasonal considerations, and traders wonder about the quality and size of the mid-crop after some hot and dry weather during the growing season. 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, although some say that too much rain is hurting the harvest in Indonesia.

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 4.690 million bags. ICE said 0 delivery notices were posted against May contracts today and that total deliveries are now 728 contracts.

Chart Trends: Trends in New York are mixed to up with objectives of 2370 and 2530 July. Support is at 2295, 2275, and 2235 July, with resistance at 2375, 2385, and 2400 July. Trends in London are mixed to down with objectives of 1500 and 1465 July. Support is at 1510, 1490, and 1475 July, with resistance at 1560, 1570, and 1590 July.

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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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