Cotton falls as rain reported in key producing areas

COFFEE (NYBOT:KCU13)

General Comments: Futures were higher in New York on speculative buying tied to some forecasts for colder and wetter conditions for Brazil Coffee areas starting this weekend. No forecast is calling for damaging temperatures, but the market is short. In addition, the rain could disturb the last of the harvest and it could get cold enough to freeze in Parana, which is nota ll that far away from Coffee producing areas. Chart trends are up in all three markets. London moved higher on some buying tied to fewer offers from Vietnam on ideas that producers there are about sold out. Exports in June as reported by the customs bureau there were less than expectations. Offers of Arabica from origin are still hard to find and feature strong differentials. Demand is improving as roasters sense the change in market direction. Brazil weather is forecast to show dry conditions, but no cold weather for the rest of the week. It could turn wetter and colder this weekend. Current crop development is still good this year. Central America crops are seeing moderate to light rains. Colombia is still reported to have good conditions.

Overnight News: Certified stocks are marginally lower today and are about 2.748 million bags. The ICO composite price is now 123.00 ct/lb. Brazil should get dry weather except for some showers in the south. Temperatures will average near to above normal, but below normal next week with frosts and perhaps a freeze possible in southern areas. Colombia should get scattered showers, and Central America and Mexico should get showers, and rains. Temperatures should average near to above normal.

Chart Trends: Trends in New York are up with objectives of 132.00 and 140.00 September. Support is at 125.00, 124.00, and 120.00 September, and resistance is at 129.00, 132.00, and 135.00 September. Trends in London are up with objectives of 1980 September. Support is at 1900, 1850, and 1820 September, and resistance is at 1980, 1995, and 2010 September. Trends in Sao Paulo are up with objectives of 156.00 and 164.00 September. Support is at 146.00, 143.00, and 140.00 September, and resistance is at 151.00, 155.00, and 159.00 September.

SUGAR (NYBOT:SBV13)

General Comments: Futures closed mixed in consolidation trading. There is not much new to talk about here so far this week. Futures trends remain down overall and price action has been weak as most expect a big production surplus for the year. Many expect production to be higher overall in Brazil due to a record Sugarcane production, and countries like Thailand and India also expect more production this year. 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 likely. Less production of Sugar beets is reported from Russia and Ukraine as farmers there elected to plant more grains.

Overnight News: Brazil should be mostly dry and warm this week, but could see colder and wetter weather this weekend.

Chart Trends: Trends in New York are mixed to down with objectives of 1580 October. Support is at 1570, 1540, and 1510 October, and resistance is at 1620, 1630, and 1650 October. Trends in London are down with objectives of 448.00 October. Support is at 457.00, 454.00, and 451.00 October, and resistance is at 465.00, 466.00, and 470.00 October.

COCOA  (NYBOT:CCU13)

General Comments: Futures closed higher on speculative buying tied to ideas that the North American grind data could be very strong. The US data should be out today. Ghana and Nigeria would appear to have the most problems with the rains, and it remains a little too dry in many parts of Ivory Coast. The weather is better in West Africa, with more moderate temperatures and some rains. A few showers are appearing again in Ivory Coast this week, but Ivory Coast will still need more rain. Other West African countries are reported to have good conditions. 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 slightly lower today at 4.803 million bags.

Chart Trends: Trends in New York are up with no objectives. Support is at 2250, 2240, and 2210 September, with resistance at 2330, 2350, and 2380 September. Trends in London are up with objectives of 1640 September. Support is at 1560, 1550, and 1530 September, with resistance at 1610, 1640, and 1660 September.

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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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