Coffee drops on improving Brazil weather reports

COFFEE

General Comments: Futures were slightly lower in low volume trading. Brazil weather has improved, and some areas of Sao Paulo could see a shower by the end of the week, which would be beneficial. Weather in other areas like Central America, where it has been dry, also provided some support. Trends have turned sideways after the recent run to higher values. Prices in general have been weak as traders anticipate another big crop out of Brazil starting the summer, and CONAB showed a big production potential in its latest production report released yesterday. Current crop development is still good this year in Brazil, but it has been dry for the past week. Dry conditions are forecast to continue in most areas, but some parts of Sao Paulo could get showers. 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.

Overnight News: Certified stocks are lower today and are about 2.741 million bags. In Brazil, CONAB estimated 2013-14 Coffee production at 48.6 million bags. The country is expected to produce 36.4 million bags of Arabica and 12,2 million bags of Robusta. The ICO composite price is now 131.98 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 aned rains. Temperatures should average near to above normal.

Chart Trends: Trends in New York are mixed. Support is at 143.00, 140.00, and 136.00 July, and resistance is at 149.00, 150.00, and 152.00 July. Trends in London are mixed to up with objectives of 2090, 2150, and 2215 July. Support is at 2020, 1980, and 1970 July, and resistance is at 2075, 2100, and 2140 July. Trends in Sao Paulo are mixed. Support is at 171.50, 170.00, and 167.50 September, and resistance is at 180.00, 182.00, and 183.00 September.

COTTON

General Comments: Futures were higher after trading lower early in the session. Traders concentrated on economic news, which was disappointing for China but good for the US. China is the largest importer of US Cotton, so less than expected industrial production put demand bulls on the defensive. The new crop months were weaker on forecasts for warm and dry weather in many US production areas that will promote active planting by farmers this week. Ideas are that the demand can continue for now as China moves to increase its stocks and as private buyers there reject offers from the government due to quality and price. Planting conditions for the next crop remain a problem in the US. Dry weather is forecast for the Delta and Southeast, and much warmer weather is expected in Texas this week. So far, planting of all crops is slow, but ideas are that farmers can get a lot of planting done with dry and warm conditions. Short term trends are mixed.

Overnight News: The Delta and Southeast will see dry conditions. Temperatures will average near to above normal. Texas will get mostly dry weather with some showers possible in Eastern areas. Temperatures will average mostly above normal. The USDA spot price is now 81.87 ct/lb. ICE said that certified Cotton stocks are now 0.508 million bales, from 0.504 million yesterday.

Chart Trends: Trends in Cotton are mixed. Support is at 85.40, 85.00, and 83.00 July, with resistance of 87.60, 88.50, and 90.00 July.

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