Sugar retraces gains made in wake of Brazil fires

FCOJ (NYBOT:OJX13)

General Comments: Futures closed higher on what was called speculative short covering. The weather is still good and demand is still bad. 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. Growing conditions in the state of Florida remain mostly good. Dry 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 showers.

Overnight News: Florida weather forecasts call for mostly dry conditions. Temperatures will average near to above normal.  

Chart Trends: Trends in FCOJ are mixed. Support is at 118.00, 116.50, and 115.00 November, with resistance at 122.50, 125.00, and 127.50 November.

COFFEE (NYBOT:KCZ13)

General Comments: Futures were lower again in all three markets as traders see no reason to buy much. Traders in London and around the world are waiting for Vietnam to harvest and sell, and the harvest is underway. The harvest has been delayed due to rains throughout the country over the last couple of weeks. The production in Vietnam is expected to be very big and 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, but the market there seems quiet now that the government has offered the puts and is repaying other support programs. Colombia is 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. Differentials were weaker yesterday. Brazil markets appear mostly quiet. Coffee is available in Central America, and offers were more animated yesterday with some business getting done as rosters appeared willing to pay a little more in terms of differentials.

Overnight News: Certified stocks are lower today and are about 2.738 million bags. The ICO composite price is now 105.00 ct/lb. Brazil should get light showers or dry conditions. Showers are likely early next week. Temperatures will average near to above normal. Colombia should get scattered showers, and Central America and Mexico should be mostly dry or get light showers. Temperatures should average near to above normal. Ecuador exported 127,072 bags of Coffee in September, from 91,579 bags in August and 149,554 bags in September, 2012.

Chart Trends: Trends in New York are mixed to down with objectives of 106.00 December. Support is at 108.00, 105.00, and 102.00 December, and resistance is at 113.50, 115.00, and 118.00 December. Trends in London are mixed to down with objectives of 1580 November. Support is at 1600, 1570, and 1540 November, and resistance is at 1650, 1670, and 1710 November. Trends in Sao Paulo are mixed to down with objectives of 123.50 December. Support is at 135.00, 132.00, and 129.00 December, and resistance is at 139.00, 140.00, and 142.00 December.

COCOA (NYBOT:CCZ13)

General Comments: Futures closed lower on speculative selling. The market had failed to make new highs for the move, and this created the selling interest. News of harvest progress in West Africa amid improving conditions was also negative. The strong demand news of the last couple of weeks should be part of the price now. Production in West Africa suffered this year due to drought in production areas. Rains are fine now, and arrivals at ports are increasing. The harvest is underway and it could be that prices work lower for the near term. However, the overall fundamental picture should support higher prices as the supply situation should be tight and demand looks strong. That implies that the market should be able to digest the harvest relatively easily and resume the longer term rally soon.

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 scattered showers and near normal temperatures. ICE certified stocks are lower today at 3.857 million bags.

Chart Trends: Trends in New York are mixed. Support is at 2690, 2655, and 2645 December, with resistance at 2780, 2800, and 2830 December. Trends in London are mixed to down with objectives of 1710 and 1660 December. Support is at 1720, 1715, and 1700 December, with resistance at 1760, 1800, and 1810 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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