Sugar falls as more crop expected to hit market

FCOJ (NYBOT:OJF14)

General Comments: Futures closed lower on some speculative profit taking. The market had moved sharply higher in response to lower tan expected production due to the greening disease. Traders are now expecting USDA to lower production even more in coming production reports. The greening disease has affected crops in a bigger way than many in the trade expected. 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 to below normal temperatures and dry conditions or a few showers.

Overnight News: Florida weather forecasts call for mostly dry conditions this week and a few showers this weekend. Temperatures will average near to above normal. 

Chart Trends: Trends in FCOJ are up with objectives of 143.00 January. Support is at 131.00, 130.00, and 126.00 January, with resistance at 138.50, 140.00, and 143.00 January.

COFFEE (NYBOT:KCZ13)

General Comments: Futures were lower as the Brazilian Real weakened against the US Dollar and gave the bears another reason to sell. The short covering rally seen Tuesday proved to be very short lived as the trade continues to concentrate on oversupply in the market. Industry and producers appeared to be quiet. Some buyers have told us that they have bought enough for the year, while some small shops still need some fill in lots. 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. 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, but there is talk of a lot of Coffee there as well. The new harvest is underway in Central America.

Overnight News: Certified stocks are little changed today and are about 2.704 million bags. The ICO composite price is now 98.57 ct/lb. Brazil should be mostly dry, but will get showers on Sunday and Monday. 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. 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. Support is at 1460, 1430, and 1400 January, and resistance is at 1520, 1575, and 1605 January. Trends in Sao Paulo are mixed. Support is at 130.00, 128.00, and 125.00 December, and resistance is at 135.00, 138.00, and 141.00 December.

COCOA (NYBOT:CCZ13)

General Comments: Futures closed higher after holding support. The rally was considered to be mostly chart based as there was no real news to support the move. It is harvest time in West Africa, and West African production as a whole seems to be good. The harvest is continuing under good conditions and it could be that prices work lower for the near term. Nigeria said yesterday that production so far in the main producing state is over 50,000 tons, from less than 45,000 tons last year. Indonesia could get some rain this week to disrupt the harvest. However, the overall fundamental picture should support generally higher prices as the supply situation should be tight once the harvest selling is done. Trade sources such as the ICCO keep talking about an extended period of short supplies and that the short production scenario could last for years. 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 3.575 million bags.

Chart Trends: Trends in New York are mixed. Support is at 2620, 2570, and 2560 December, with resistance at 2690, 2720, and 2740 December. Trends in London are mixed. Support is at 1675, 1650, and 1640 December, with resistance at 1700, 1710, and 1730 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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