Coffee drops as traders wait for Vietnam harvest to begin

COFFEE (NYBOT:KCZ13)

General Comments: Futures were lower, with London the lead to the down side on what appeared to be speculative long liquidation. The lack of Robusta supplies for the short term had supported the London market until yesterday, but the trade action yesterday seemed to be more chart related selling than anything else. Traders there are waiting for Vietnam to harvest and sell, but that is still a few weeks away. The harvest has been delayed due to rains throughout the country over the last couple of weeks. Traders 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 half of the crop. 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. Brazil markets appear mostly quiet. Coffee is available in Central America, but the market there seems quiet.

Overnight News: Certified stocks are lower today and are about 2.752 million bags. GCA stocks are 5.446 million bags, from 5.561 million last month. The ICO composite price is now 109.95 ct/lb. Brazil should get mostly dry weather through Wednesday, then some showers. 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. Vietnam exported 63,553 tons of Coffee in September, down 23.8% from August and 8.6% from last year.

Chart Trends: Trends in New York are mixed. Support is at 115.00, 113.00, and 111.00 December, and resistance is at 118.00, 119.00, and 121.00 December. Trends in London are mixed. Support is at 1670, 1640, and 1600 November, and resistance is at 1730, 1750, and 1755 November. Trends in Sao Paulo are mixed. Support is at 138.00, 135.00, and 132.00 December, and resistance is at 142.00, 143.00, and 145.00 December.

COTTON (NYBOT:CTZ13)

General Comments: Futures closed a little higher in consolidation trading. Trading has been quiet as the harvest continues to move forward. The lack of USDA reports has greatly reduced volume as traders do not know exactly what is going on. India is suffering from a major cyclone that has hit the northeast part of the country. The area affected is a strong agricultural production area and some Cotton is produced there. Brazil conditions are reported to be very good in Bahia. US crop conditions right now are generally good in Texas. The Delta and Southeast are reporting generally favorable conditions as well. Trends turned down on the charts with the price action this week.

Overnight News: The Delta and Southeast will see showers move from west to east today and tomorrow. A few showers could develop in the Delta on Friday and in the Southeast on Saturday. Temperatures will average near to above normal. Texas will see light showers Friday, otherwise dry weather. Temperatures will average near to below normal. The USDA spot price is not available today. ICE said that certified Cotton stocks are now 0.036 million bales, from 0.35 million yesterday.

Chart Trends: Trends in Cotton are mixed to down with no objectives. Support is at 82.90, 82.50, and 81.70 December, with resistance of 84.20, 85.50, and 85.80 December.

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