Orange juice higher as traders consider cold weather

COFFEE (NYBOT:KCZ13)

General Comments: Futures were higher on what appeared to be short covering from speculators. The buying was tied to weakness in the Brazilian Real and reports of excessive rains in the last week or two in Vietnam that has halted the harvest. Charts show that futures are now testing the upper end of the short term trading range in New York and that trends are turning up for at least the short term in London and Sao Paulo. Industry and producers appeared to be quiet, but both are watching carefully for signs of a confirmed low. Traders still 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. Vietnam is at harvest, but rains are big there right now and no harvesting is being done. So far, offers from Vietnam have been light, but the harvest should resume and then offers might increase. However, producers there also do not like the price, so the selling might stay weaker than normal. It will take more positive price action in London to get the producers to increase selling. 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. Brazil is studying new support programs for producers in that country and could announce something this week.

Overnight News: Certified stocks are lower today and are about 2.694 million bags. The ICO composite price is now 102.50 ct/lb. Brazil will get scattered showers. Temperatures will average near to above normal, but will turn cooler late in the week. 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 up with objectives of 1620 January. Support is at 1520, 1500, and 1480 January, and resistance is at 1575, 1605, and 1640 January. Trends in Sao Paulo are mixed to up with objectives of 135.00 and 139.00 March. Support is at 131.00, 129.00, and 128.00 March, and resistance is at 135.00, 138.00, and 141.00 March.

SUGAR (NYBOT:SBH14)

General Comments: Futures were higher yesterday on weakness in the Brazilian Real. The currency moves implied that Brazil will have somewhat less interest in offering to the world market for the short term. Traders remain bearish on ideas of big supplies available to the cash market, and chart trends remain generally down as offers remain available. Countries like India and Thailand are selling as much as possible. No big demand reports have been seen in the press lately. Weather conditions in key production areas around the world are rated as mostly good. There has not been any news of losses to Sugar areas in Vietnam and China in the wake of the storm that moved into those countries after devastating Philippines, but some losses are possible. Traders are also watching weather in the Bay of Bengal where more rain could hurt some Sugar production potential. Weather in Brazil appears to be mostly good.

Overnight News: Brazil could see showers with near to above normal temperatures.

Chart Trends: Trends in New York are down with no objectives. Support is at 1750, 1735, and 1715 March, and resistance is at 1795, 1815, and 1825 March. Trends in London are down with objectives of 457.00 March. Support is at 466.00, 462.00, and 460.00 March, and resistance is at 472.00, 477.00, and 478.00 March.

COCOA (NYBOT:CCZ13)

General Comments: Futures closed higher and at new highs for the last two years on follow through buying. Futures are now at the top end of the recent range. It is harvest time in West Africa, and the harvest is continuing under good conditions. Indonesia and Malaysia 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. A Nigerian official said that the main growing area is not producing as many beans as expected and that prices are working higher in the country. Cameroon is noting a short crop as well. On the other hand, Ghana is expecting production to increase to 24,000 tons this year, from 19,000 tons last year due to favorable weather and new trees coming into production from a replanting program. 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. Price action on Friday suggests otherwise, and reports yesterday that Butter prices were moving higher again will support higher futures prices this week.

Overnight News: Scattered showers or dry conditions are expected in West Africa. Temperatures will average near to above normal. Malaysia and Indonesia should see scattered showers. Temperatures should average near to above normal. Brazil will get dry conditions and near normal temperatures. ICE certified stocks are lower today at 3.548 million bags.

Chart Trends: Trends in New York are mixed to up with no objectives. Support is at 2740, 2685, and 2650 March, with resistance at 2800, 2830, and 2860 March. Trends in London are mixed to up with objectives of 1810 March. Support is at 1740, 1710, and 1680 March, with resistance at 1770, 1800, and 1830 March.

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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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