Cocoa rises as bulls see production waning

FCOJ (NYBOT:OJX13)

General Comments: Futures closed higher on follow through speculative short covering and some new speculative buying. There will be less production this year due to greening disease and some unfavorable weather earlier in the year. However, 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. Fruit is reported to be sizing well and of consistent size and trees are reported in good condition. Some early harvest has started. 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. USDA said that FCOJ in Cold Storage was 795 million pounds. 

Chart Trends: Trends in FCOJ are mixed. Support is at 120.00, 117.00, and 114.00 November, with resistance at 124.00, 127.00, and 129.50 November.

COFFEE (NYBOT:KCZ13)

General Comments: Futures were lower on ideas of big world production. Traders think that there is still a lot of Coffee to sell in Brazil and in northern South America and also know that a fairly big crop is coming from Vietnam. The Vietnamese harvest will continue under good conditions as weather is mostly dry. The production in Vietnam is expected to be very big and traders expect more downward pressure on prices as the harvest starts to hit the market. Brazil has a lot of Coffee to sell yet, but the market there is quiet. Colombia is actively selling even with very cheap prices and the production there is much larger than in recent years. The rest of northern Latin America was quiet. Coffee is available in Central America, but the market was quiet. There were offers, but bids and offers were far apart.

Overnight News: Certified stocks are slightly higher today and are about 2.712 million bags. The ICO composite price is now 99.86 ct/lb. Brazil should get light showers. Temperatures will average near to above normal. Colombia should get scattered showers, and Central America and Mexico should get light showers. Temperatures should average near to above normal. LIFFE stocks are now 5,302 lots.

Chart Trends: Trends in New York are down with objectives of 106.00 December. Support is at 105.00, 102.00, and 99.00 December, and resistance is at 108.00, 110.00, and 113.50 December. Trends in London are down with no objectives. Support is at 1460, 1430, and 1400 January, and resistance is at 1575, 1605, and 1665 January. Trends in Sao Paulo are down with objectives of 123.50 December. Support is at 126.00, 123.00, and 120.00 December, and resistance is at 132.00, 135.00, and 136.50 December.

SUGAR (NYBOT:SBH14)

General Comments: Futures were little changed but closed on a weak note. Prices could continue to work lower in the short term as there are still probably some trapped longs from the big rally seen a couple of weeks ago. The fire at the port warehouses of Coopersucar has hurt the overall export pace from Brazil, but other origins, mostly India and Thailand, have been happy to step in and fill the void. The overall fundamental of big supplies remains. Sugar prices had dropped until recently due to big world production and especially big production ion Brazil. The production in Brazil and around the world is still there, but the ability of Brazil to export is much more difficult now. Meanwhile, countries like India and Thailand have a little less competition for sales. Weather conditions in key production areas around the world are rated as mostly good.

Overnight News: Brazil could see light showers with near to above normal temperatures. .

Chart Trends: Trends in New York are down with objectives of 1775 March. Support is at 1830, 1820, and 1815 March, and resistance is at 1880, 1905, and 1915 March. Trends in London are down with objectives of 471.00 and 442.00 December. Support is at 478.00, 470.00, and 465.00 December, and resistance is at 489.00, 493.00, and 498.00 December.

Chart Trends: Trends in New York are mixed to down with objectives of 2620, 2530, and 2410 December. Support is at 2645, 2610, and 2560 December, with resistance at 2695, 2750, and 2780 December. Trends in London are mixed to down with objectives of 1660 December. Support is at 1670, 1640, and 1610 December, with resistance at 1725, 1740, and 1760 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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