Cocoa climbs in response to strong EU grind data

COCOA (NYBOT:CCZ13)

General Comments: Futures closed higher in response to very strong grind data from the EU. Traders expect strong data from the US as well. The strong demand combined with ideas of short production this year was more tan enough to keep the rally going yesterday and should be enough to keep prices strong for at lest the near term. Production in West Africa suffered this year due to drought in production áreas. Rains are fine now, but are expected to be above average for the last half of the month. More than normal rains could impede harvest progress and hurt bean quality. The quality could be hurt as most farmers do not have good storage facilities. However, a strong rally now might encourage farmers to sell, and that would help with the quality as the beans would move to better facilities enar the ports. Malaysia and Indonesia weather is favorable with scattered showers.

Overnight News: Scattered showers are expected in West Africa. Temperatures will average near normal. Malaysia and Indonesia should see scattered showers, but southern áreas could be dry. Temperatures should average above normal. Brazil will get mostly dry conditions and warm temperatures. ICE certified stocks are lower today at 4.079 million bags.

Chart Trends: Trends in New York are up with objectives of 2720 and 2810 December. Support is at 2690, 2655, and 2645 December, with resistance at 2740, 2770, and 2800 December. Trends in London are up with objectives of 1770 and 1840 December. Support is at 1745, 1730, and 1715 December, with resistance at 1780, 1810, and 1840 December.

COTTON (NYBOT:CTZ13)

General Comments: Futures closed mostly a little higher in consolidation trading. Trading has been quiet as there has been no demand news for more tan a week now and as the harvest continues to move forward. But, the lack of USDA reports on demand and the daily price index and differentials table has greatly reduced volumen as traders do not know exactly what is going on. India is turning warmer and drier there this week after some big rains last week. Worries about Chinese production are also heard after some big typhoons passed near important production areas. This área is also turning drier this week. Brazil conditions are reported to be very good in Bahia. US crop conditions right now are generally good in Texas. Trends turned down on the charts with the price action this week.

Overnight News: The Delta will be dry and Southeast will see showers in the east, otherwise dry weather. All áreas should be dry over the weekend. Temperatures will average above normal. Texas will see dry weather through Saturday, then light showers. Temperatures will average above normal. The USDA spot price is not avilable today. ICE said that certified Cotton stocks are now 0.020 million bales, from 0.017 million yesterday.

Chart Trends: Trends in Cotton are down with no objectives. Support is at 82.90, 82.10, and 81.70 December, with resistance of 84.20, 85.50, and 85.80 December.

FCOJ (NYBOT:OJX13)

General Comments: Futures closed lower again as the weather stays tranquil in Florida. The market is keeping in a range as there will be less production this year due to greening disease and some unfavorable weather earlier in the year, but has no reason to rally as demand remains mostly on the weak side and there have been no tropical systems to hit the state so far. In fact, there have not been that many tropical systems seen in the Atlantic at all this year.. Florida weather conditions overall remain good, with good rains before and good irrigation wáter available now. Prodiction will be down due to the greening disease and some drought stress early in the year, but these losses are mostly factored into the price. 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 conditions. 

Overnight News: Florida weather forecasts call for some light showers. Temperatures will average near to above normal.

Chart Trends: Trends in FCOJ are mixed. Support is at 125.00, 122.50, and 121.00 November, with resistance at 127.50, 130.00, and 132.00 November.

COFFEE (NYBOT:KCZ13)

General Comments: Futures were mixed, with London and Sao Paulo trading higher, but New York trading lower after failing to hold an early rally attempt. It was a disappointing day for the New York market. The lack of Robusta supplies for the short term caused the rally in the other markets. Traders there are waiting for Vietnam to harvest and sell, but that is still a few weeks away. They expect more downward pressure on prices once the harvest starts to hit the market. Brazil is thought to have a lot of Coffee to sell yet, and producers there have now sold about 43% of the crop, according tos afras e Mercado. Colombia and Peru are actively selling. Producers all over the world are worried about the low prices and are trying to hold back on offers, but differentials and futures prices remain very low. Dry conditions are in the forecast in Brazil. Brazil markets appear mostly quiet. Coffee is available in Central America, but the market there seems very quiet. Central America crop conditions are said to be good overall, but the rust is still a big problem. 

Overnight News: Certified stocks are a little lower today and are about 2.758 million bags. The ICO composite price is now 109.72 ct/lb. Brazil should get mostly dry weather. Temperatures will average near to above normal. Colombia should get scattered showers, and Central America and Mexico should get showers and rains. Northern Mexico should be mostly dry. Temperatures should average near to above normal. 

Chart Trends: Trends in New York are mixed. Support is at 113.00, 111.00, and 108.00 December, and resistance is at 117.00, 118.00, and 119.00 December. Trends in London are mixed to up with no objectives. Support is at 1710, 1670, and 1640 November, and resistance is at 1755, 1770, and 1790 November. Trends in Sao Paulo are mixed. Support is at 135.00, 132.00, and 129.00 December, and resistance is at 140.00, 142.00, and 143.00 December.

SUGAR (NYBOT:SBH14)

General Comments: Futures were higher and started a new leg up on the charts. It was partly a currency related move as the Real turned higher against the US Dollar. The currency moves overshadowed the harvest and production data from UNICA that showed a Sharp increase in production due to the better weather in Brazil. Drier weather is still reported in production áreas, but the harvest has been further delayed by recent rains. Heavier rains seen in the last few weeks could have hurt Sugar yields, but yields could get a little better now with the return of drier weather. India should still have more than enough production to allow for exports. However, a cyclone is entering the country this weekend and could hurt crops. There is talk of strong offers from Thailand, and Thai differentials are stable. Price action suggests that the rally is starting to stall, but there are still targets above the highs to go after yet.

Overnight News: Brazil could see mostly dry conditions and near to above normal tempertures. .

Chart Trends: Trends in New York are up with objectives of 1880, 1900, and 1940 March. Support is at 1845, 1835, and 1825 March, and resistance is at 1880, 1910, and 1935 March. Trends in London are up with objectives of 511.00, 513.00, and 534.00 December. Support is at 499.00, 493.00, and 487.00 December, and resistance is at 508.00, 515.00, and 517.00 December.

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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