Cotton mixed as buyers wait for pullbacks

COFFEE

General Comments: Futures were lower in New York on speculative selling tied to ideas of big Brazil and Colombia production.  London was higher on some short covering to end the week, but remains in down trends due to ideas of big supplies from producers, mostly from Vietnam.  London futures appear oversold as well.  Arabica cash markets remain quiet right now and roasters in the US are showing little interest in buying.  Buying interest could appear with this latest move lower.  There is talk of increasing offers of Robusta from producers as they apparently did not sell when prices were much higher.  Most sellers, including Brazil, are quiet and are waiting for futures to move higher.  Buyers are interested on cheap differentials.  Brazil weather is forecast to show dry conditions, but no cold weather.  There are some forecasts for cold weather to develop in Brazil at the end of next week.  Current crop development is still good this year in Brazil.  Central America crops are seeing good rains now.  Colombia is reported to have good conditions.

Overnight News:  Certified stocks are little changed today and are about 2.746 million bags.  The ICO composite price is now 116.22 ct/lb.  Brazil should get dry weather except for some showers in the southwest on Sunday.  Temperatures will average near to above normal.  Colombia should get scattered showers, and Central America and Mexico should get showers.  Temperatures should average near to above normal. 

Chart Trends:  Trends in New York are down with objectives of 116.00 July.  Support is at 121.00, 119.00, and 116.00 July, and resistance is at 125.00, 127.00, and 130.00 July.  Trends in London are down with objectives of 1765 July.  Support is at 1770, 1740, and 1710 July, and resistance is at 1810, 1845, and 1865 July.  Trends in Sao Paulo are down with no objectives.  Support is at 147.00, 144.00, and 140.00 September, and resistance is at 155.00, 159.00, and 161.50 September.

SUGAR        

General Comments:  Futures closed sharply higher on what appeared to be short covering from speculators.  Everyone talks about the big supplies, but reports of renewed demand interest helped rally the market today.  July was higher as short speculators start to pull out of positions before the contract stops trading at the end of the month.  There was no other real news for the market.  The price action overall remains weak and implies that further losses are coming down the road due to coming Brazil supplies.  Traders remain bearish on ideas of big supplies, especially from Brazil.  Traders in Brazil expect big production as the weather is good.  Demand is said to be strong from North Africa and the Middle East, but starting to fade now as needs are getting covered.   

Overnight News: Showers are expected in Brazil.  Temperatures should average near to above normal.

Chart Trends: Trends in New York are mixed.  Support is at 1680, 1665, and 1650 October, and resistance is at 1730, 1760, and 1790 October.  Trends in London are mixed.  Support is at 469.00, 465.00, and 463.00 October, and resistance is at 477.00, 480.00, and 487.00 October.

COCOA        

General Comments:  Futures closed lower on what appeared to be a lot of speculative long liquidation.  There was not a lot of news for the market, and price action reflected this.  It looks like the buying was based on the charts as New York futures could not move to new lows and in fact have held at an important area on the charts.  But, ideas of weak demand after the recent big rally kept some selling interest around.  The weather is good in West Africa, with more moderate temperatures and some rains.  The mid-crop harvest is moving to completion, 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 5.084 million bags.

Chart Trends:  Trends in New York are mixed to down with objectives of 2210 July.  Support is at 2240, 2220, and 2190 July, with resistance at 2300, 2340, and 2380 July.  Trends in London are down with objectives of 1405 July.  Support is at 1460, 1430, and 1420 July, with resistance at 1490, 1500, and 1520 July.

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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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