Sugar pressured by large Brazil supplies

FCOJ

General Comments: Futures closed higher 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 2.0 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.

Chart Trends: Trends in FCOJ are mixed. Support is at 140.00, 136.00, and 132.00 July, with resistance at 145.00, 146.00, and 147.50 July.

COFFEE

General Comments: Futures were higher in all three markets s traders reacted more to the news of the government support program for producers in Brazil. Some forecasts for colder temperatures in Brazil also supported futures. Bulls were unable to break through strong resistance near 145.00 NY July, but have a chance to get this done today.. 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 and were reinforced by strong exports from Brazil in April. 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 is too dry for good new crop flowering, although rains are in the forecast for this week. Colombia is reported to have good conditions. The market remains in a trading range for now and is at the upper end of the range.

Overnight News: Certified stocks are higher today and are about 2.742 million bags. ICE delivery notices are 0 contracts today and now total 159 contracts for the month. The ICO composite price is now 131.50 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. Brazil Brazil exported 2.694 million bags of Coffee in April, from 2.005 million last year. Year to date exports are now 25.7 million bags.

Chart Trends: Trends in New York are mixed. Support is at 139.00, 135.00, and 133.00 July, and resistance is at 145.00, 147.00, and 150.00 July. Trends in London are mixed. Support is at 1980, 1970, and 1955 July, and resistance is at 2030, 2050, and 2075 July. Trends in Sao Paulo are mixed. Support is at 170.00, 167.00, and 165.00 September, and resistance is at 175.00, 178.00, and 180.00 September.

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 higher today at 4.794 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 2420, 2435, and 2460 July. Trends in London are mixed. Support is at 1545, 1515, and 1490 July, with resistance at 1580, 1590, and 1610 July.

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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