Coffee falls after Brazil delays price support measures

COFFEE (NYBOT:KCU13)

General Comments: Futures were lower after the Brazilian government delayed announcement of its price support measures on Monday afternoon. Many who had covered positions in anticipation of the market returned to the sell side. It is possible the government will announce something today. Coffee appears to be available in Central America as farmers and mills start to clear inventories before the next harvest. Robusta prices were lower in London in sympathy with New York. Current crop development is still good this year in most production areas of Latin America and also appears to be mostly good now in Asia after some too dry or too wet weather at times earlier in the year. Central America crops are seeing better rains than in the last couple of weeks, but many areas remain too dry, especially Nicaragua. Colombia is still reported to have good conditions. Harvest conditions are good in Brazil. Prices are in a range, but price action is weak.

Overnight News: Certified stocks are higher today and are about 2.762 million bags. The ICO composite price is now 116.67 ct/lb. The ICO estimates world 2012-13 production at 144.5 million bags. Brazil should get dry conditions. 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.

Chart Trends: Trends in New York are mixed. Support is at 115.00, 112.00, and 110.00 September, and resistance is at 121.00, 122.00, and 125.00 September. Trends in London are mixed. Support is at 1850, 1820, and 1795 September, and resistance is at 1905, 1915, and 1950 September. Trends in Sao Paulo are mixed to down with objectives of 132.00 and 122.00 September. Support is at 138.00, 135.00, and 132.00 September, and resistance is at 144.00, 146.00, and 151.00 September.

COTTON (NYBOT:CTV13)

General Comments: Futures closed a little higher as traders noted the slow development of the crop. The poor planting conditions early in the year has made the crop progress behind normal. Growing conditions remain generally very good. Temperatures are warmer again in Texas, but some very beneficial precipitation has been seen in the last couple of weeks and production ideas are generally high. Conditions in Alabama, Mississippi, and Missouri are good after some big rains earlier in the growing season. Export sales have been on the weak side lately as the buy side of the market waits for prices to work lower. World production ideas are also high. Weather for Cotton still appears good in India, Pakistan, and China. Overall, it looks like futures have made some short term tops and can now slide lower into harvest. How low prices go will depend on the demand side of the market now.

Overnight News: The Delta and Southeast will see showers off and on through the weekend, mostly in northern areas. Temperatures will average near to above normal. Texas will see dry weather this week and maybe a shower in the north. Temperatures will average above normal. The USDA spot price is now 81.73 ct/lb. ICE said that certified Cotton stocks are now 0.070 million bales, from 0.070 million yesterday.

Chart Trends: Trends in Cotton are mixed. Support is at 85.00, 84.30, and 84.00 October, with resistance of 86.00, 86.50, and 87.00 October.

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