Coffee drops as traders wait for Vietnam harvest to begin

FCOJ (NYBOT:OJX13)

General Comments: Futures closed lower as the weather stays tranquil in Florida. 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. Production 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. Fry weather has returned 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, but showers are likely late in the week.

Overnight News: Florida weather forecasts call for mostly dry conditions this week and showers this weekend. Temperatures will average near to above normal. 

Chart Trends: Trends in FCOJ are mixed to down with objectives of 121.00, 117.00, and 107.00 November. Support is at 122.50, 121.00, and 118.00 November, with resistance at 125.00, 127.50, and 130.00 November.

SUGAR (NYBOT:SBH14)

General Comments: Futures were lower again as the Brazilian Real weakened against the US Dollar. The market had rallied in the last few sessions as the Real gained, but found plenty of sellers once the currency strength went away. Dry weather is still reported in production áreas of Brazil. 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 last weekend and could hurt crops. The Rupee has been working lower. There is talk of strong offers from Thailand, and Thai differentials are stable. Price action suggests that the rally is starting to stall, but nearby New York contracts could approach 1950 and strong resistance just above that level before finding much new selling interest from producers.

Overnight News: Brazil could see mostly dry conditions through Wednesday, then showers and near to above normal temperatures. .

Chart Trends: Trends in New York are mixed to up with objectives of 1940 and 1950 March. Support is at 1860, 1845, and 1835 March, and resistance is at 1915, 1935, and 1950 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 505.00, 510.00, and 515.00 December.

COCOA (NYBOT:CCZ13)

General Comments: Futures closed higher as fears of short production returned. Traders expect strong data from the US as well once the data is released. The strong demand combined with ideas of short production this year was more than enough to keep the rally going yesterday and should be enough to keep prices strong for at least the near term. Production in West Africa suffered this year due to drought in production areas. 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 near 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 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 4.005 million bags.

Chart Trends: Trends in New York are mixed to up with objectives of 2810 December. Support is at 2690, 2655, and 2645 December, with resistance at 2770, 2800, and 2830 December. Trends in London are mixed to up with objectives of 1840 December. Support is at 1745, 1730, and 1715 December, with resistance at 1810, 1840, and 1870 December.

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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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