Coffee higher after Brazil increases minimum price

FCOJ

General Comments:  Futures closed lower in consolidation trading.  Many are now looking ahead to Friday and the next USDA Oranges production estimates.  USDA is expected to keep the crop production estimate unchanged, but might lower the total production by up to 1.0 million boxes.  Traders are wrestling with more reports of losses from greening disease on the one side and beneficial rains that have hit the state.  The growing conditions in Florida are expected to improve with the recent rains, but drier weather is expected for the rest of this week.  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 mostly dry conditions.  Temperatures will average near to above normal and above normal this weekend. ICE said that 0 delivery notices were posted today and that total deliveries for the month are 104 contracts.  Cocoa Cola announced that it would commit $2 billion to support planting of new Orange trees in Florida.

Chart Trends:  Trends in FCOJ are mixed to down with objectives of 130.00 and 117.00 July.  Support is at 136.00, 132.00, and 131.00 July, with resistance at 141.00, 145.00, and 146.00 July.

SUGAR        

General Comments:  Futures closed lower in light volume trading.  It was mostly a consolidation day yesterday.  The market feels sold out as the bears have not been able to keep the down trend going and are being forced to cover.  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.  Demand is said to be strong from North Africa and the Middle East as buyers get stocks in hand for Ramadan in July.  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 1760, 1720, and 1710 July, and resistance is at 1800, 1835, and 1850 July.  Trends in London are mixed.  Support is at 491.00, 488.00, and 485.00 August, and resistance is at 502.00, 504.00, and 510.00 August.

COCOA        

General Comments:  Futures closed slightly lower in consolidation trading.  It was a quiet news day.  Chart patterns suggest further rallies could be coming down the road and demand has been better than trade expectations.  However, a short term correction is possible as futures have made initial targets for the move.  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.  Reports indicate that bean sizes are small due to the heat and dry weather seen earlier in the year.  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 sharply higher today at 4.792 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 2370, 2320, and 2295 July, with resistance at 2435, 2460, and 2490 July.  Trends in London are mixed to 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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