Cotton falls on Chinese liquidation rumors

COFFEE (NYBOT:KCZ13)

General Comments: Futures were lower in quiet trading on ideas that the harvest is of to a good start in Central America and that Colombia has a lot of Coffee to sell. Traders think that there is still a lot of Coffee to sell in Brazil and in northern South America and also know that a big crop is coming from Vietnam. All these countries and regions have been offering with low differentials. Harvest until now has been done mostly in the main growing province, but almost all áreas should be harvesting something now. So far, offers from Vietnam have been light. Cyclones and tropical storms are forecast for Philippines and Vietnam at the end of this week and could damage production. Brazil has a lot of Coffee to sell yet, but the market there is quiet. 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 lower today and are about 2.710 million bags. The ICO composite price is now 99.22 ct/lb. Brazil should get light showers this week and dry weather this weekend. 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. 

Chart Trends: Trends in New York are down with objectives of 98.00 December. Support is at 102.00, 99.00, and 96.00 December, and resistance is at 106.00, 108.00, and 110.00 December. Trends in London are mixed. Support is at 1460, 1430, and 1400 January, and resistance is at 1520, 1575, and 1605 January. Trends in Sao Paulo are down with objectives of 123.50 December. Support is at 123.00, 120.00, and 117.00 December, and resistance is at 128.00, 131.00, and 132.00 December.

SUGAR (NYBOT:SBH14)

General Comments: Futures were a little lower. Prices could continue to work lower in the short term is still a lot of Sugar available to the world market despite the logistical problems in Brazil. It is vry likely that this is just a rally for a few days. Chart trends remain down, but there are some ideas that the market is oversold. The fire at the port warehouses 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 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. They have taken advantage of the reduced capacity in Brazil to increase their own export sales. Weather conditions in key production áreas around the world are rated as mostly good.

Overnight News: Brazil could see light showers with near to above normal tempertures. Cyclones and tropical storms are expected to pass through Philippines and Vietnam late this week and could damge crops.

Chart Trends: Trends in New York are mixed. Support is at 1820, 1815, and 1770 March, and resistance is at 1850, 1880, and 1905 March. Trends in London are down with objectives of 480.00 and 457.00 March. Support is at 480.00, 478.00, and 476.50 December, and resistance is at 490.00, 493.00, and 495.00 December.

COCOA (NYBOT:KCZ13)

General Comments: Futures closed higher on reports of big rains in Indonesia. We have been unable to confgirm the big rains in Indonesia. Ivory Coast is estimating its production at about unchanged from last year, and West African production as a whole seems to be good. There have been no reports yet on quality or yields from Ghana, but Nigeria says it has good crops. The weather is good now, and arrivals at ports are increasing throughout the region. The harvest is continuing under good conditions 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. That implies that the market should be able to digest the harvest relatively easily and resume the longer term rally soon. However, demand has slacked off since the big surge of the last several weeks. Reports indicate that chocolate manufactures are now covered through the big demand holiday period coming up and do not need to buy. That implies that Cocoa prices can work lower through the harvest.

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 3.675 million bags. Indonesia Cocoa vean shipments were 5,280 tons last month, from 10,409 tons in September and 5,735 tons last year. Ghana Cocoa purchases are 108,000 tons in October, from 131,000 tons last year. Arrivals at ports in Ivory Coast are estimated at 210,000 tons so far this year, from 139,000 tons last year. 

Chart Trends: Trends in New York are mixed. Support is at 2690, 2650, and 2630 December, with resistance at 2770, 2780, and 2810 December. Trends in London are mixed. Support is at 1700, 1670, and 1640 December, with resistance at 1740, 1760, and 1780 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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