Sugar falls as Brazilian real, Indian rupee weaken

Raw sugar (Source Bloomberg) Raw sugar (Source Bloomberg)

SUGAR (NYBOT:SBV13)

General Comments: Futures closed slightly lower on a stable Brazilian real and forecasts for colder weather in Brazil. It probably will not get cold enough to do more damage, but the colder weather could at least slow the harvest pace again. Traders are noting the weakness in the Indian rupee and decided that was a reason to sell as India will get more rupees for sugar sold. However, the government is also launching a massive new program to provide subsidized food for the poor and might not sell as much as speculators expect. Countries like Thailand and India also expect more production this year. However, there have been concerns raised about Indian production in the last week due to heavier monsoon rains. 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 Short term trends are now sideways.

Chart Trends: Trends in New York are mixed. Support is at 1625, 1610, and 1595 October, and resistance is at 1665, 1685, and 1700 October. Trends in London are down with objectives of 478.00 and 469.00 October. Support is at 473.00, 470.00, and 465.00 October, and resistance is at 481.00, 486.00, and 488.00 October.

COTTON (NYBOT:CTV13)

General Comments: Futures closed a little lower in quiet trading. Futures traded both sides of the market as traders weighed slow crop development against improving conditions. The market had been moving sharply lower in response to US and Indian production estimates, but has hit some support áreas on the charts and bounced. Buyers have pulled away from the market and will wait for a bottom to form before buying in a big way. Very hot weather conditions in China continue, and the weather in Cotton áreas is not really improvng right now in that country. However, some showers are in the forecast to provide some help. Weather is turning hot in the US again, too. US crops remain behind the normal pace. The poor planting conditions early in the year has made the crop progress behind normal. Texas is dry and warm. Weather for Cotton still appears good in India. Trends are down, but some short term recovery is posible given the magnitude of the down move seen last week.

Overnight News: The Delta will be dry and Southeast will see a few showers. Temperatures will average above to much above normal in the Delta and mostly above normal in the Southeast. Texas will see dry weather. Temperatures will average above normal. The USDA spot price is now 80.33 ct/lb. ICE said that certified Cotton stocks are now 0.023 million bales, from 0.025 million yesterday. USDA said that net Upland Cotton export sales were 68,800 bales this year and 2,200 bales next year. Net Pima sales were 10,200 bales this year and 0 bales next year.

Chart Trends: Trends in Cotton are mixed to down with objectives of 8300 October. Support is at 83.80, 83.55, and 82.90 October, with resistance of 85.30, 86.00, and 86.50 October.

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