Cocoa, cotton fall as U.S. dollar rally sends commodities scurrying

FCOJ

General Comments: Futures closed slightly lower, but held support near 1540.00 in the nearby contract. Futures have been working generally lower as showers have been seen and conditions are said to have improved in almost the entire state. Ideas are that the better precipitation will help trees fight the greening disease. 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. Temperatures are warm in the state, but there are showers reported somewhere in the state every day now. The Valencia harvest is continuing. Brazil is seeing near to above normal temperatures and mostly dry weather, but showers are possible next week.

Overnight News: Florida weather forecasts call for showers. Temperatures will average near to above normal.

Chart Trends: Trends in FCOJ are down with objectives of 141.00, 133.00, and 130.00 July. Support is at 142.00, 139.00, and 137.50 July, with resistance at 145.00, 146.50, and 150.00 July.

COFFEE

General Comments: Futures were sharply lower as the Real fell and the US Dollar rallied on the Fed announcements and some weak economic data from China. It was a bad day as trends in all three markets turned back down. However, futures also got to or closet o the final down side objectives for the down trend, so it is possible that the market can rally going into the weekend. Arabica cash markets remain quiet right now and Robusta selling interest has become less, as well. Most sellers, including Brazil, are quiet and are waiting for futures to move higher. Buyers are interested on cheap differentials, and might start to force the issue if prices hold and start to move higher in the short term. Brazil weather is forecast to show dry conditions, but no cold weather. There are some forecasts for cold weather to develop in Brazil early next week, but so far the market is not concerned. 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 2.748 million bags. The ICO composite price is now 113.37 ct/lb. Brazil should get dry weather except for some showers in the southwest on Sunday. All areas could get showers early next week. Temperatures will average near to above normal. Colombia should get scattered showers, and Central America and Mexico should get showers, with some big rains possible in central and southern Mexico and northern Central America. Temperatures should average near to above normal. ICE said that 132 delivery notices were posted against July today and that total deliveries for the month are now 666 contracts.

Chart Trends: Trends in New York are down with no objectives. Support is at 116.00, 113.00, and 110.00 September, and resistance is at 122.00, 123.50, and 125.00 September. Trends in London are mixed to down with objectives of 1670 and 1580 September. Support is at 1705, 1680, and 1650 September, and resistance is at 1755, 1775, and 1800 September. Trends in Sao Paulo are down with no objectives. Support is at 140.00, 137.00, and 134.00 September, and resistance is at 148.00, 151.00, and 155.00 September.

SUGAR  

General Comments: Futures closed sharply lower on strength in the US Dollar and weakness in the Brazilian Real, combined with disappointing economic news from China. Trends flipped to down with the price action yesterday, and some follow through selling is possible on Friday or early next week. 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. ICE said that a Sugar storage facility in Paranagua, Brazil, was damaged by fire this week and that deliveries could be affected.

Overnight News: Showers are expected in Brazil, mostly in the south and southwest late this weekend and in all areas next week. Temperatures should average near to above normal.

Chart Trends: Trends in New York are mixed to down with objectives of 1640 and 1580 October. Support is at 1665, 1650, and 1620 October, and resistance is at 1700, 1720, and 1730 October. Trends in London are mixed to down with objectives of 458.00 and 441.00 October. Support is at 469.00, 466.00, and 463.00 October, and resistance is at 475.00, 480.00, and 484.00 October.

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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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