Cocoa falls as western Africa weather improves

FCOJ (NYBOT:OJU13)

General Comments: Futures closed lower along with most commodities markets and as there are still no real threats showing in the tropical Atlantic. The weather in the tropics has started to show a little more life. There is a system in the western Atlantic that does not show much damage potential and some are starting to form in the Eastern Atlantic as well. None of them look to be a threat for at least several days, if at all. The bulk of the tropical Atlantic is still seeing some very dry conditions and wind shear to prevent tropical storm development, but at least some systems that could become tropical are starting to appear. Growing conditions in the state of Florida remain mostly good. Showers are reported and conditions are said to be very good in almost the entire state. Temperatures are warm. Brazil is seeing near to above normal temperatures and mostly dry weather, and there are reports of stress to trees and the potential for lower production.

Overnight News: Florida weather forecasts call for some showers, but mostly dry conditions. Temperatures will average near normal.

Chart Trends: Trends in FCOJ are down with no objectives. Support is at 130.00, 125.00, and 124.00 September, with resistance at 135.00, 137.00, and 140.00 September.

COFFEE (NYBOT:KCU13)

General Comments: Futures were lower as the Real moved lower against the US Dollar, but held support on Brazil weather forecasts. Cold weather is in the forecast for the next couple of days and then temperatures should start to moderate again. Differentials held firm on a lack of offer from producers. Coffee appears to be available in Central America as farmers and mills clear inventories before the next harvest, but not much of the new crop is being offered yet. Current crop development is still good this year in most production areas of Latin America and also appears to be mostly good in Asia. Central America crop areas remain too dry, but conditions are said to be good overall. Colombia is still reported to have good conditions. Harvest conditions are good in Brazil, but cold weather is possible in the next couple of days. No damage of any significance is anticipated. Lows could be in the mid 30 degree area. Prices for Arabica are in a range.

Overnight News: Certified stocks are higher today and are about 2.772 million bags. GCA stocks are 5.432 million bags, from 5.201 million last month. The ICO composite price is now 120.19 ct/lb. Brazil should get dry conditions. Temperatures will average below to much below normal this week, then will moderate this weekend. 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, 117.00, and 115.00 September, and resistance is at 125.00, 126.00, and 130.00 September. Trends in London are mixed. Support is at 1900, 1885, and 1860 September, and resistance is at 1980, 2000, and 2030 September. Trends in Sao Paulo are mixed. Support is at 143.00, 141.00, and 138.00 September, and resistance is at 150.00, 151.00, and 155.00 September.

SUGAR (NYBOT:SBU13)

General Comments: Futures closed a little lower on weakness in the Real against the US Dollar, but did not fall much as cold weather in the forecast for harvest areas today and tomorrow. Temperatures are not expected to get cold enough to cause much damage, especially since the crop was hit just a few weeks ago in mostly the same areas. Brazil production has been down a bit lately due to bad harvest weather, but could still improve if the weather gets better soon. However, mills have been more interested in producing ethanol rather than Sugar due to price. Countries like Thailand and India also expect more production this year. Some Sugarcane was damaged in the freezes of a couple of weeks ago, and there could be some additional damage over the next couple of days. However, most forecasts call for temperatures to stay above freezing. Demand for ethanol has been good, but there is still a lot of Sugar and the supply side fundamentals seem to overwhelm any demand side strength over time.

Overnight News: Brazil could see dry weather and moderate temperatures for the most part, but frosts and some freezing temperatures are possible in the next couple of days.

Chart Trends: Trends in New York are mixed to up with objectives of 1750, 1770, and 1800 October. Support is at 1700, 1670, and 1650 October, and resistance is at 1735, 1750, and 1790 October. Trends in London are mixed to up with objectives of 514.00 October. Support is at 500.00, 494.00, and 491.00 October, and resistance is at 508.00, 511.00, and 514.00 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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