Cocoa climbs on worries holiday demand will outstrip supply

COCOA (NYBOT:CCZ13)

General Comments: Futures closed slightly higher after trading both sides of unchanged. The fundamentals are considered bullish. Worries are that there will not be enough Cocoa beans available for processing for end of the year holiday demand. Cocoa is between crops, and offers are light. The lack of offer comes at a time when rains have returned to West Africa. Ideas are that crop conditions there are generally improving, but that already harvested beans can get moldy due in part to producer holding patterns and poor storage facilities. Ideas are that drought and hot temperatures seen earlier in the growing season has hurt bean size and yields. West Africa is expected to get scattered showers, and conditions there are said to be improving for almost all producers. Temperatures are moderate. 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 normal. Malaysia and Indonesia should see scattered showers, but southern areas could be dry. Temperatures should average above normal. Brazil will get mostly dry conditions and warm temperatures. ICE certified stocks are lower today at 4.369 million bags. LIFFE stocks are now 6,016 standard delivery units, 169 large delivery units, and 1 bulk delivery unit.

Chart Trends: Trends in New York are mixed to up with objectives of 2720 December. Support is at 2600, 2565, and 2540 December, with resistance at 2650, 2680, and 2710 December. Trends in London are mixed to up with objectives of 1770 December. Support is at 1690, 1670, and 1650 December, with resistance at 1730, 1740, and 1770 December.

COTTON (NYBOT:CTV13)

General Comments: Futures closed higher once again in response to forecasts for heavy rains this weekend and into next week that could hurt quality for the crop in open bolls. USDA showed that 37% of the crop had open bolls in the Monday report, and that number has only increased. It is possible for a couple of inches of rain to fall from Texas to the east. Georgia could get double that amount or even more. US crop conditions right now are generally good with moderating temperatures and rains in the forecast for Texas this week and dry weather in the forecast for the Delta and Southeast. But, the crop remains well behind the normal pace due to delayed planting in the spring. The weather forecasts and the crop progress and condition reports offer no concerns for production at this time. Weather for Cotton still appears good in India and Pakistan, and harvest should be starting there. Cotton in China is seeing rain that could hurt quality.

Overnight News: The Delta will see some storms on Friday and Southeast will see showers this weekend. Temperatures will average near to above normal. Texas will see scattered showers again at the end of the week. Temperatures will average above normal. The USDA spot price is now 81.55 ct/lb. ICE said that certified Cotton stocks are now 0.015 million bales, from 0.015 million yesterday.

Chart Trends: Trends in Cotton are mixed. Support is at 84.20, 83.70, and 83.55 December, with resistance of 85.80, 86.25, and 86.55 December.

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About the Author

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.

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