Cocoa moves higher as U.S. dollar shows weakness

FCOJ

General Comments: Futures closed slightly lower again as USDA showed another reduction in Oranges production. Production was estimated at 1233.4 million boxes and the yield per box was left unchanged at 1.59 gallons per box. Chanel has fizzled and is no longer much of a threat to Oranges in Florida. The system got caught in some wind shear and is now more of a rain even, and rain will be mostly beneficial to the state. Showers are reported 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. Temperatures are warm in the state, but there are showers reported. Brazil is seeing near to above normal temperatures and mostly dry weather.

Overnight News: Florida weather forecasts call for showers. Temperatures will average near normal. ICE said that 0 delivery notices were posted today and that total deliveries for the month are now 0 contracts.

Chart Trends: Trends in FCOJ are mixed to up with objectives of 145.00 and 155.00 September. Support is at 132.00, 130.00, and 127.00 September, with resistance at 138.00, 139.00, and 140.00 September.

COFFEE

General Comments: Futures were higher in New York and Sao Paulo on buying tied to a weaker US Dollar. London moved higher on some speculative buying tied to less offer from Vietnam on ideas that producers there are about sold out. Offers of Arabica from origin are still hard to find. Demand was not much stronger than the offer and the cash market remains very quiet. Sellers, including Brazil, are quiet and are waiting for better prices of the next crop. Buyers are interested on cheap differentials, and cheap futures. Brazil weather is forecast to show dry conditions, but no cold weather. Current crop development is still good this year. Central America crops are seeing good rains now. Colombia is reported to have good conditions.

Overnight News: Certified stocks are lower today and are about 2.738 million bags. The ICO composite price is now 119.00 ct/lb. Brazil should get dry weather except for some showers in the northeast. Temperatures will average near to above normal. Colombia should get scattered showers, and Central America and Mexico should get showers, and rains. Temperatures should average near to above normal. ICE said that 0 delivery notices were posted against July today and that total deliveries for the month are now 811 contracts. LIFFE stocks are now 12,114 lots.

Chart Trends: Trends in New York are mixed. Support is at 120.00, 117.00, and 116.00 September, and resistance is at 125.00, 126.00, and 127.00 September. Trends in London are up with objectives of 1900 September. Support is at 1860, 1820, and 1790 September, and resistance is at 1905, 1940, and 1950 September. Trends in Sao Paulo are mixed. Support is at 143.50, 140.00, and 137.00 September, and resistance is at 148.00, 150.00, and 151.00 September.

SUGAR  

General Comments: Futures closed lower on ideas of big supplies. Many expect production to be higher overall due to a record Sugarcane production and better weather now, and UNICA showed this was possible in its updates at midweek. Countries like Thailand and India also expect more production this year. Futures trends remain down overall and London prices started a new down trend yesterday. The Indian monsoon is good so far this season and this should help with Sugarcane production in the country. Northern areas are in good shape, but southern areas might be too hot and dry and some stress to the Sugarcane is possible in the short term. In addition, industry sources there told wire services this week that planted area is down by about 5% and that overall production would be lower even with very good weather.

Overnight News: Mostly dry weather is forecast in Brazil. Temperatures should average near to above normal.

Chart Trends: Trends in New York are down with objectives of 1580 October. Support is at 1600, 1570, and 1540 October, and resistance is at 1630, 1650, and 1665 October. Trends in London are down with objectives of 448.00 October. Support is at 460.00, 457.00, and 454.00 October, and resistance is at 466.00, 470.00, and 476.00 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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