Cocoa rallies on chart-based buying


General Comments: Futures closed higher on follow through buying. The rally was considered to be mostly chart based. It is harvest time in West Africa, and the harvest is continuing under good conditions. 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 higher today at 3.578 million bags. LIFFE stocks are now 6,195 standard lots, 163 large lots, and 0 bulk lots.

Chart Trends: Trends in New York are mixed. Support is at 2630, 2580, and 2560 March, with resistance at 2690, 2730, and 2750 March. Trends in London are mixed. Support is at 1680, 1660, and 1640 March, with resistance at 1725, 1740, and 1750 March.


General Comments: Futures closed lower on news that China could begin to sell Cotton from state reserves next week. Ideas are that the sales there would kill demand for imported Cotton, especially from the US. Good weather in US productions areas should be replaced by scattered showers over the weekend, but the crop should remain in good condition as the rains are not expected to be big. It will turn warmer this weekend after a very cold 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.

Overnight News: The Delta and Southeast will see light precipitation this weekend. Temperatures will average near to above normal this weekend and will turn cool again next week. Texas will see light precipitation this weekend and dry weather next week. Temperatures will trend to near to above normal this weekend and will turn cool again next week. The USDA spot price is 73.87 ct/lb. today. ICE said that certified Cotton stocks are now 0.193 million bales, from 0.192 million yesterday. USDA said that net Upland Cotton export sales were 472,700 bales this year and 9,200 bales next year. Net Pima sales were 32,500 bales this year and 0 bales next year.

Chart Trends: Trends in Cotton are mixed. Support is at 75.90, 75.30, and 75.00 December, with resistance of 77.70, 78.50, and 78.80 December.

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