Cocoa moves higher as U.S. dollar shows weakness

COCOA  

General Comments: Futures closed higher and tested recent highs as the U.S. dollar moved sharply lower. Many are waiting for the U.S. and European grind data to be released next week to see how strong the demand is right now. Ideas of good harvest weather and active movement of beans to ports in western Africa remain. The cash market in Africa is slow right now as buyers have already bought and are now waiting to see how the main crop turns out late this year. The weather is good in West Africa, with more moderate temperatures and some rains. Some showers are appearing again in Ivory Coast this week, and the rest of the region is in good condition. Ivory Coast will still need more rain. 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 4.838 million bags. ICE said that 1 delivery notice was posted today and that total deliveries for the month are 377 contracts. LIFFE stocks are 8,389 standard units, 189 large units, and 4 bulk units.

Chart Trends: Trends in New York are mixed to up with objectives of 2260 September. Support is at 2210, 2165, and 2130 September, with resistance at 2250, 2280, and 2300 September. Trends in London are mixed to up with no objectives. Support is at 1530, 1500, and 1460 September, with resistance at 1550, 1560, and 1600 September.

COTTON

General Comments: Futures were lower on increased ending stocks estimates from USDA. USDA now estimates 2012-13 ending stocks at 3.90 million bales and also estimates 2013-14 ending stocks at 2.90 million bales. Both estimates were increased 300,000 bales due to less demand. A weaker US Dollar helped demand ideas but was overwhelmed by the USDA estimates. Parts of the Southeast are getting too much rain and Texas growing areas remain mostly hot and dry. Conditions in Alabama, Mississippi, and Missouri are below average now. Futures held the short term range. It is possible that futures can work lower again as demand has turned soft, but production and weather might be more important in the short term. Weather for Cotton appears good in India, Pakistan, and China.

Overnight News: The Delta should be dry and Southeast will see showers and rains through the weekend. Showers are possible in the Delta and Southeast next week Temperatures will average near to below normal. Texas will be mostly dry this weekend but could see some showers next week. Temperatures will average near to above normal. The USDA spot price is now 80.81 ct/lb. ICE said that certified Cotton stocks are now 0.593 million bales, from 0.606 million yesterday.

Chart Trends: Trends in Cotton are mixed to down with objectives of 84.70 and 83.00 October . Support is at 85.20, 84.00, and 83.10 October, with resistance of 86.00, 86.50, and 87.00 October.

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