Cocoa falls as concern grows over bean size and quality

COCOA  

General Comments: Futures closed lower. It was another quiet news day. 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 4.994 million bags.

Chart Trends: Trends in New York are mixed. Support is at 2285, 2275, and 2255 July, with resistance at 2335, 2365, and 2370 July. Trends in London are mixed. Support is at 1515, 1490, and 1480 July, with resistance at 1560, 1580, and 1590 July.

COTTON

General Comments: Futures were lower after trading higher early in the session. A disappointing export sales report released yesterday by USDA hurt the bull case. Traders concentrated on economic news, which was disappointing for China and for the US. China is the largest importer of US Cotton. The new crop months were weaker on more 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. 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 after showers today. 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 81.06 ct/lb. ICE said that certified Cotton stocks are now 0.509 million bales, from 0.509 million yesterday.

Chart Trends: Trends in Cotton are mixed. Support is at 85.40, 85.00, and 83.00 July, with resistance of 87.10, 87.60, and 88.50 July.

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