Cotton higher on strong Chinese demand, planting slows

COFFEE

General Comments: Futures were higher as details leaked on the Brazil government price support program for its producers.  Some talked of colder forecasts for Brazil as a reason to buy.  The program could have the effect of temporarily causing some tightness in supplies in the spot market as selling from Brazil could be deferred.  Longer term, the Coffee will still be there so rally potential would be limited.  Prices in general have been weak as traders anticipate another big crop out of Brazil starting the summer, and bears note that better rains should help increase Vietnamese production potential this year.  Ideas are that supplies available to the market are good.  Current crop development is still good this year in Brazil, but it has been dry for the past week and dry conditions are forecast to continue.  Central America crops are mostly harvested and it is too dry for good 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 0 contracts today and now total 158 contracts for the month.  The ICO composite price is now 129.44 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. Colombia produced 1.08 million bags of Coffee in April, and exported 810,000 bags.

Chart Trends:  Trends in New York are mixed to down with objectives of 126.00 and 116.00 July.  Support is at 135.00, 133.00, and 131.00 July, and resistance is at 142.00, 145.00, and 147.00 July.  Trends in London are mixed to up with objectives of 2050, 2090, and 2150 July.  Support is at 2010, 1970, and 1955 July, and resistance is at 2035, 2050, and 2075 July.  Trends in Sao Paulo are mixed to down with objectives of 161 September.  Support is at 163.00, 162.00, and 161.00 September, and resistance is at 166.00, 167.50, and 170.00 September.

SUGAR        

General Comments:  Futures closed lower.  Traders remain bearish on supplies, especially from Brazil, and this has hurt New York prices.  However, the market seems unable to sustain the down trend and might have factored in all the bearish news 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.  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. 

Chart Trends: Trends in New York are mixed.  Support is at 1720, 1710, and 1680 July, and resistance is at 1780, 1800, and 1835 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 501.00, 504.00, and 510.00 August.

COCOA        

General Comments:  Futures closed slightly higher in consolidation trading.  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 4.618 million bags. ICE said 0 delivery notices were posted against May contracts today and that total deliveries are now 743 contracts.

Chart Trends:  Trends in New York are mixed to up with objectives of 2485 and 2530 July.  Support is at 2400, 2370, and 2320 July, with resistance at 2435, 2460, and 2490 July.  Trends in London are up with objectives of 1670 July.  Support is at 1560, 1545, and 1515 July, with resistance at 1590, 1610, and 1620 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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