Cocoa drops on profit-taking ahead of harvest

COCOA (NYBOT:CCZ13)

General Comments: Futures closed lower again on more speculative profit taking. The fundamentals are still considered bullish as production still looks to be less than demand for the coming year. However, it is possible that a lot of the projected shortages are now part of the price. Ivory Coast has increased the guaranteed price to farmers, and that might help with production prospects even though the main crop is about ready for harvest. Farmers might buy more inputs to help increase mid crop production potential. Cocoa is between crops, and offers are light. Rains have returned to West Africa. Ideas are that crop conditions there are generally good. Ideas are that drought and hot temperatures seen earlier in the growing season has hurt bean size and yields. Malaysia and Indonesia weather is 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 4.189 million bags.

Chart Trends: Trends in New York are mixed. Support is at 2555, 2535, and 2505 December, with resistance at 2620, 2650, and 2680 December. Trends in London are mixed to down with no objectives. Support is at 1650, 1640, and 1630 December, with resistance at 1680, 1700, and 1715 December.

COTTON (NYBOT:CTV13)

General Comments: Futures closed moderately higher as Tropical Storm Karen formed and was forecast to move into Georgia. The storm could hurt open bolls and hurt overall quality. Traders also talk about monsoon rains in India that are slow to withdraw this year. The extra rains could really hurt quality there, and maybe yields. Worries about Chinese production are also Heard after some big typhoons passed near important production areas. Some short covering was noted on ideas that the crop is less than expected in the US, in part due to the recent big rains. US crop conditions right now are generally good in Texas. Moves higher today could set the stage for a new leg higher on the charts.

Overnight News: The Delta and Southeast will see showers developing in the Delta on Friday and over the weekend in the Southeast. Temperatures will average above normal. Texas will see dry weather. Temperatures will average above normal this week and below normal this weekend. The USDA spot price is not available today. ICE said that certified Cotton stocks are now 0.011 million bales, from 0.011 million yesterday.

Chart Trends: Trends in Cotton are up with objectives of 8940 and 9300 December. Support is at 85.80, 85.50, and 84.60 December, with resistance of 87.70, 87.85, and 89.40 December.

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