Cocoa moves lower as processors take to sidelines

FCOJ

General Comments: Futures closed higher in response to forecasts from NOAA for an active to very active hurricane season this year. It was a positive close, and more rallies are now possible. Traders are wrestling with more reports of losses from greening disease on the one side and beneficial rains that have hit the state on the other. Greening disease and what it might mean to production prospects continues to be a primary support item and will be for several years. 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, but some showers are possible late this week.

Overnight News: Florida weather forecasts call for scattered afternoon showers through the weekend. Temperatures will average near to above normal this week and near normal this weekend.

Chart Trends: Trends in FCOJ are mixed to up with objectives of 160.00 and 177.00 July. Support is at 145.00, 144.00, and 139.00 July, with resistance at 150.00, 153.00, and 156.00 July.

COFFEE

General Comments: Futures were higher on speculative buying tied to ideas of a slower harvest pace in Brazil and a weaker US Dollar. Most sellers, including Brazil, withdrew offers after futures broke down on Wednesday. Brazil weather is forecast to show some big rains that could hurt the harvest pace but help trees getting ready to flower. Trends have turned down due to the expected large production in Brazil. Buyers are not interested, but offers in the physical market are not big. It is speculators who keep pushing the futures lower. Current crop development is still good this year in Brazil, but it has been dry. Central America crops are mostly harvested and is too dry for good new crop flowering. Colombia is reported to have good conditions.

Overnight News: Certified stocks are lower today and are about 2.753 million bags. The ICO composite price is now 123.42 ct/lb. Brazil should get mostly dry conditions or light showers. Temperatures will average near to above normal. Colombia should get scattered showers, and Central America and Mexico should get mostly dry conditions away from some showers in Eastern Mexico and northern Central America. Temperatures should average near to above normal.

Chart Trends: Trends in New York are down with objectives of 126.00 and 116.00 July. Support is at 128.00, 125.00, and 122.00 July, and resistance is at 133.00, 135.00, and 138.00 July. Trends in London are down with objectives of 1940 and 1930 July. Support is at 1950, 1930, and 1920 July, and resistance is at 2000, 2020, and 2030 July. Trends in Sao Paulo are down with no objectives. Support is at 156.00, 153.00, and 150.00 September, and resistance is at 161.50, 166.00, and 170.00 September.

SUGAR   

General Comments: Futures closed higher in recovery trading. The close was weak and implies that further losses are coming. There were some reports of shipments getting booked ahead of the Ramadan holiday to give some demand to the market. Traders remain bearish on ideas of big supplies, especially from Brazil. Traders in Brazil expect big production as the weather is good. However, Datagro in Brazil noted that planting is 21% behind the normal pace due to recent rains. 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 weak.

Overnight News: Mostly dry conditions are expected in Brazil, but some showers are expected on Friday. Temperatures should average near to above normal.

Chart Trends: Trends in New York are down with objectives of 1670, 1610, and 1600 July. Support is at 1650, 1620, and 1600 July, and resistance is at 1700, 1720, and 1740 July. Trends in London are mixed to down with no objectives. Support is at 470.00, 467.00, and 464.00 August, and resistance is at 480.00, 487.00, and 491.00 August.

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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