Cotton falls as report shows production increases

COFFEE (NYBOT:KCZ13)

General Comments: Futures were higher as some short covering was noted before a super cyclone hit Philippines and Vietnam. The storm devastated Philippines, but has since curved away from central Vietnam and lost a lot of its force. London futures could give back the gains today, and New York could work back to test the 100 area again. What happens at that time will be key for short term moves by bulls and bears alike. 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. Vietnam is at harvest. 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. 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 2.708 million bags. The ICO composite price is now 99.61 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.

Chart Trends: Trends in New York are mixed to down with objectives of 98.00 December. Support is at 102.00, 99.00, and 96.00 December, and resistance is at 107.00, 108.00, and 110.00 December. Trends in London are mixed to down with objectives of 1400 and 1335 January. Support is at 1430, 1400, and 1370 January, and resistance is at 1490, 1520, and 1575 January. Trends in Sao Paulo are mixed to down with no objectives. Support is at 128.00, 125.00, and 122.00 December, and resistance is at 132.00, 135.00, and 138.00 December.

SUGAR (NYBOT:SBH14)

General Comments: Futures were a little higher in consolidation trading. Prices could continue to work lower in the short term is still a lot of Sugar available to the world market. Chart trends remain down. The production in Brazil and around the world is still there, and Brazil is exporting at a strong pace despite the fire at Santos port. Meanwhile, countries like India and Thailand have a little less competition for sales and they are selling as much as possible. Traders have noticed that the world still has plenty of Sugar available and that the demand is not real strong. Weather conditions in key production areas around the world are rated as mostly good. However, a huge cyclone passed over Philippines last week and damaged some Sugarcane crops. In addition, the storm is now moving into northern Vietnam and China, where about half the Chinese Sugarcane is produced. The system could still bring flooding rains and could damage about half of the Chinese Sugarcane production this week.

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 1780, 1770, and 1750 March, and resistance is at 1825, 1850, and 1880 March. Trends in London are down with objectives of 457.00 March. Support is at 477.00, 473.00, and 468.00 March, and resistance is at 484.00, 490.00, and 493.00 March.

COCOA (NYBOT:CCZ13)

General Comments: Futures closed lower. It is harvest time in West Africa. 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, mostly dry, 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. Indonesia could get some rain this week to disrupt the harvest. However, the overall fundamental picture should support higher prices as the supply situation should be tight. 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 3.644 million bags.

Chart Trends: Trends in New York are mixed. Support is at 2630, 2610, and 2560 December, with resistance at 2720, 2750, and 2770 December. Trends in London are mixed. Support is at 1670, 1660, and 1640 December, with resistance at 1730, 1750, 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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