Sugar sees production fall in Brazil, but fails to rally

SUGAR (NYBOT:SBV13)

General Comments: Futures traded higher on early follow-through buying tied to less production in Brazil, but closed a little lower as the rally started to fail as crude oil futures worked lower. UNICA said that mills in Brazil's main sugar-cane growing region produced 3.2 million metric tons of sugar in the second half of August, down 3.7% from last year. Ethanol production from the region increased 8.3% to 2.1 billion liters. The demand for ethanol makes Sugar futures sensitive to moves in the energy complex. There is not much on offer in the cash market for now, and that is helping Sugar futures hold the recent range. Thailand and India expect more production this year, and both countries are actively offering their supplies into the world market. Demand for ethanol has been good. Chinese demand has been soft, but Middle East demand is good. Prices appear to be in a trading range for now due to solid demand and big production.

Overnight News: Brazil could see dry weather and moderate temperatures.

Chart Trends: Trends in New York are up with objectives of 1780 March. Support is at 1740, 1710, and 1700 March, and resistance is at 1780, 1810, and 1840 March. Trends in London are up with no objectives. Support is at 488.00, 486.00, and 479.00 December, and resistance is at 496.00, 501.00, and 505.00 December.

COTTON (NYBOT:CTV13)

General Comments: Futures closed little changed as traders started to get ready for the USDA reports today. The market expects USDA to show good production and good supplies. Many areas are turning hot and dry again, and this created some buying interest as well. China issued some positive economic data over the weekend to help demand ideas stay afloat after the stronger than expected export sales report from last week. US crop development remains behind due to delayed planting this year, but crop conditions right now are generally good. Weather is warm in the US, with the Delta and the Southeast expecting above normal temperatures into the weekend. Texas is dry and warm. Weather for Cotton still appears good in India. The market is getting ready for the harvest, and any rallies now might be very limited in scope.

Overnight News: The Delta will be dry and Southeast will see a few showers late in the week. Temperatures will average above normal in the Delta and mostly above normal in the Southeast. Temperatures should start to turn cooler this weekend. Texas will see dry weather. Temperatures will average above normal. The USDA spot price is now 81.36 ct/lb. ICE said that certified Cotton stocks are now 0.018 million bales, from 0.018 million yesterday. USDA said that net Upland Cotton export sales were 134,400 bales this year and 19,800 bales next year. Net Pima sales were 16,000 bales this year and 0 bales next year.

Chart Trends: Trends in Cotton are mixed to up with no objectives. Support is at 83.90, 82.80, and 82.30 October, with resistance of 85.05, 85.30, and 86.00 October.

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