Cocoa turns lower as traders watch harvest data

COCOA (NYBOT:CCZ13)

General Comments: Futures closed lower on speculative selling. Trends have started to turn down for at least the short term, and speculators appear to be getting out of long positions. News of harvest progress in West Africa amid improving conditions was negative. The strong demand news of the last couple of weeks should be part of the price now. The weather is good 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 or dry conditions are expected in West Africa. Temperatures will average near normal. Malaysia and Indonesia should see scattered showers. Temperatures should average above normal. Brazil will get dry conditions and near normal temperatures. ICE certified stocks are lower today at 3.853 million bags.

Chart Trends: Trends in New York are mixed to down with objectives of 2620, 2530, and 2410 December. Support is at 2655, 2645, and 2610 December, with resistance at 2715, 2750, and 2780 December. Trends in London are down with objectives of 1660 December. Support is at 1700, 1670, and 1660 December, with resistance at 1740, 1760, and 1800 December.

COTTON (NYBOT:CTZ13)

General Comments: Futures closed sharply lower on follow through selling. Demand shown in the USDA export sales reports yesterday was poor. Good weather in US productions areas has seen the harvest pace pick up quite a bit this week. Traders should get more reports on demand next week. 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 are mostly down on the charts and price action yesterday was very weak.

Overnight News: The Delta and Southeast will see dry weather. Temperatures will average near to below normal. Texas will see dry weather. Temperatures will average below normal this week and near to above normal this weekend. The USDA spot price is 76.51 ct/lb. today. ICE said that certified Cotton stocks are now 0.110 million bales, from 0.102 million yesterday.

Chart Trends: Trends in Cotton are down with no objectives. Support is at 78.80, 78.30, and 77.90 December, with resistance of 79.25, 79.75, and 80.10 December.

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