Cotton higher on forecasts for dry weather

Next page: Coffee, Sugar and Cocoa

COFFEE (NYBOT:KCU13)

General Comments: Futures were lower in New York on speculative selling tied to changed forecasts for colder and wetter conditions for Brazil Coffee areas. Forecasts showed some moderation in temperatures, but there is still a chance for some damaging temperatures this week. In addition, the rain could disturb the last of the harvest and it could get cold enough to freeze in Parana, which is not all that far away from Coffee producing areas, and that areas in Minas Gerais and Sao Paulo could get frost if not more. Chart trends are up in London, but turned mixed on Friday in New York and Sao Paulo. London moved higher on some buying tied to less offer from Vietnam on ideas that producers there are about sold out. 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 lower today and are about 2.751 million bags. The ICO composite price is now 120.77 ct/lb. Brazil should get some showers off and on all week. 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 mixed. Support is at 120.00, 119.00, and 118.00 September, and resistance is at 127.00, 129.00, and 132.00 September. Trends in London are up with no objectives. Support is at 1940, 1900, and 1850 September, and resistance is at 2000, 2010, and 2025 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 152.00, 155.00, and 159.00 September.

SUGAR (NYBOT:SBV13)

General Comments: Futures closed higher on what appeared to be some speculative buying that appeared once October held a support area on the charts. Speculators are still very short in this market and have decided to cover some of these positions in the aftermath of forecasts calling for wet and cold weather this week in Brazil. There is not much new to talk about here besides the weather. Futures trends remain down overall and price action has been weak until last week as most expect a big production surplus for the year. News that Brazil mills intend to concentrate on Ethanol production at the expense of Sugar production help to put a floor under the market. 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. Less production of Sugar beets is reported from Russia and Ukraine as farmers there elected to plant more grains.

Overnight News: Brazil could see colder and wetter weather this week.

Chart Trends: Trends in New York are mixed. Support is at 1615, 1595, and 1570 October, and resistance is at 1650, 1665, and 1690 October. Trends in London are mixed. Support is at 461.00, 459.00, and 457.00 October, and resistance is at 468.00, 470.00, and 476.00 October.

COCOA (NYBOT:CCU13)

General Comments: Futures closed higher on speculative buying tied to the North American grind that was very strong. The US data was much above trade expectations and should produce stronger prices again this week. Weather remains generally good in Africa. Ghana and Nigeria would appear to have the best rains, but it remains a little too dry in many parts of Ivory Coast. Temperatures are moderate. 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 lower today at 4.774 million bags.

Chart Trends: Trends in New York are up with no objectives. Support is at 2350, 2300, and 2280 September, with resistance at 2380, 2440, and 2470 September. Trends in London are up with objectives of 1640 September. Support is at 1590, 1560, and 1550 September, with resistance at 1640, 1660, and 1680 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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