Sugar drops as market fills Brazil port losses

SUGAR (NYBOT:SBH14)

General Comments: Futures were lower on follow through speculative selling. Prices could continue to work lower in the short term as there still is a lot of sugar available to the world market despite the logistical problems in Brazil. It is very 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 areas around the world are rated as mostly good.

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

Chart Trends: Trends in New York are down with objectives of 1800 and 1775 March. Support is at 1780, 1770, and 1750 March, and resistance is at 1825, 1850, and 1880 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.

COTTON (NYBOT:CTZ13)

General Comments: Futures closed higher after trading sharply higher to limit up early in the session. Traders are getting ready for the USDA reports tomorrow and there was a lot of speculative short covering. There is a lot of talk that demand is not strong and the harvest is active. But, speculators have been selling and selling in this market. Good weather in U.S. productions areas should be replaced by scattered showers over the middle of the week, but the crop should remain in good condition as the rains are not expected to be big. Traders should get more reports on demand this 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 down on the charts.

Overnight News: The Delta and Southeast will see dry weather. Temperatures will average near to below normal late in the week, then near to above normal by the beginning of next week. Texas will see dry weather. Temperatures will average near to above normal. The USDA spot price is 74.51 ct/lb. today. ICE said that certified Cotton stocks are now 0.175 million bales, from 0.172 million yesterday. USDA said that net Upland Cotton export sales were 303,700 bales this year and 900 bales next year. Net Pima sales were 3,100 bales this year and 0 bales next year.

Chart Trends: Trends in Cotton are mixed to down with objectives of 75.10 December. Support is at 76.25, 75.30, and 75.00 December, with resistance of 78.80, 79.00, and 80.00 December.

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