Coffee rallies as producers hold onto inventories

COFFEE (NYBOT:KCH14)

General Comments: Futures were sharply higher in London and a little higher in New York and Sao Paulo. London was higher on reports of light offers again from Vietnam due to recent rains and low prices. Roasters and others look for supplies and some have turned to Arabica, although not enough to move New York futures that much. The Arabica market is seeing only light offers as well, but buying interest for Arabica overall remains very limited. Brazil said last week it is considering new measure to support producers if needed. Brazil has a lot of Coffee to sell, but the market there remains quiet as producers wait for prices to rally above the cost of production. The rest of northern Latin America was quiet, but there is talk of a lot of Coffee there as well. Colombia has been more active, but sales have tailed off lately Central America is showing light offers as the harvest progresses under mostly good conditions. New York is trading in a range, but London continues moving higher in the short term and is now closet o objectives for the move.

Overnight News: Certified stocks are lower today and are about 2.673 million bags. The ICO composite price is now 104.41 ct/lb. Brazil will get scattered showers this weekend. Temperatures will average near to above normal. Colombia should get scattered showers, and Central America and Mexico should get mostly dry weather. Temperatures should average near to above normal.

Chart Trends: Trends in New York are mixed. Support is at 107.00, 105.50, and 104.00 March, and resistance is at 112.00, 115.00, and 117.00 March. Trends in London are up with objectives of 1760 January. Support is at 1725, 1665, and 1630 January, and resistance is at 1750, 1770, and 1780 January. Trends in Sao Paulo are mixed. Support is at 132.00, 131.00, and 129.00 March, and resistance is at 136.50, 138.00, and 140.00 March.

COTTON (NYBOT:CTH14)

General Comments: Futures closed mixed in consolidation trading. Prices remain in a trading range, and it seems like the market wants some demand news. Prices are still getting support from the storm that hit the production areas last week. Quality has suffered with the storm, and there is potential for some yield loss as well. There are questions about demand in China as the government there has offered its supplies into the domestic market. It sold half of its offer at the auction last week and will most likely offer more soon. Wire reports indicate that some production has been lost in China after recent bad weather in some growing areas. Brazil conditions are reported to be very good in Bahia. Harvest continues this week in the US, but should get interrupted again late in the week when the cold and snow and rain arrives.

Overnight News: The Delta and Southeast should see dry weather today, then some showers and snow late in the week and through the weekend. Temperatures will average below normal. Texas will see rain and snow for the next couple of days, then dry conditions. Temperatures will average much below normal. The USDA spot price is 74.94 ct/lb. today. ICE said that certified Cotton stocks are now 0.225 million bales, from 0.237 million yesterday.

Chart Trends: Trends in Cotton are mixed. Support is at 78.00, 77.40, and 76.65 March, with resistance of 79.65, 80.50, and 80.95 March.

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