Cotton falls as demand estimates show ample supplies

COFFEE

General Comments: Futures were lower in all three markets and failed near a resistance area on the New York charts. Some forecasts for colder temperatures in Brazil supported futures, but the market seemed to have played out the Brazil support Price news for now. Bulls were unable to break through strong resistance near 150.00 NY July. 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. 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, although rains are in the forecast for this week. Colombia is reported to have good conditions. The market is back in a trading range for now.

Overnight News: Certified stocks are slightly lower today and are about 2.744 million bags. ICE delivery notices are 0 contracts today and now total 160 contracts for the month. The ICO composite price is now 131.45 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 showers and rains. Temperatures should average near to above normal.

Chart Trends: Trends in New York are up with objectives of 151.00, 160.00, and 175.00 July. Support is at 140.00, 136.00, and 132.00 July, and resistance is at 149.00, 150.00, and 152.00 July. Trends in London are up with objectives of 2090, 2150, and 2215 July. Support is at 2020, 1980, and 1970 July, and resistance is at 2050, 2075, and 2100 July. Trends in Sao Paulo are up with objectives of 186.00, 187.00, and 192.00 September. Support is at 174.50, 171.50, and 170.00 September, and resistance is at 180.00, 182.00, and 183.00 September.

SUGAR

General Comments: Futures closed lower in light volume trading. Traders are still talking about big production in Brazil and around the world. 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 1720, 1710, and 1680 July, and resistance is at 1775, 1800, and 1835 July. Trends in London are mixed to down with objectives of 481.00 August. Support is at 482.00, 479.00, and 476.00 August, and resistance is at 496.00, 502.00, and 504.00 August.

COCOA

General Comments: Futures closed lower on what appeared to be long liquidation along with some producer selling. It was another 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 in process as futures have made initial targets for the move and has weather has improved in western Africa. 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. The weather now is good, with more moderate temperatures and some rains. 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 4.777 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 down with no objectives. Support is at 2295, 2275, and 2235 July, with resistance at 2370, 2390, and 2400 July. Trends in London are mixed to down with objectives of 1500 and 1465 July. Support is at 1515, 1490, and 1480 July, with resistance at 1565, 1580, and 1590 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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