Sugar drops as market fills Brazil port losses

FCOJ (NYBOT:OJF14)

General Comments: Futures closed higher again as traders look ahead to the USDA production reports on Friday. Traders anticipate production between 132 and 134 million boxes in Florida. Demand remains weak 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 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 to up with objectives of 130.00 January. Support is at 120.00, 117.00, and 116.00 January, with resistance at 126.00, 127.00, and 130.00 January.

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 areas 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 97.77 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.

COCOA (NYBOT:CCZ13)

General Comments: Futures closed lower in consolidation trading. 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

Chart Trends: Trends in New York are mixed. Support is at 2690, 2660, 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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