Coffee rises as producers hold out for higher prices

COFFEE (NYBOT:CTH14)

General Comments: Futures were higher in all three markets as New York finally reacted to increased demand for Arabica and the lack of offer of Robusta from Vietnam. Roasters and others look for supplies have turned to Arabica, although not enough to move New York futures out of the trading range. Vietnamese keep holding out for higher prices, and futures in London have responded as the major roasters are reluctant to change the blends and add Arabica in a big way. The Arabica market is seeing only light offers, but buying interest for Arabica overall remains limited. Colombia and Peru remain the most active sellers. The Brazil 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. Central America is showing light offers as the harvest progresses under mostly good conditions. New York is trading in a range and is testing support areas.

Overnight News: Certified stocks are lower today and are about 2.664 million bags. The ICO composite price is now 102.52 ct/lb. Brazil will get scattered showers this week. Temperatures will average near to below normal. Colombia should get scattered showers, and Central America and Mexico should get mostly dry weather, but showers are likely in northern Mexico. Temperatures should average near to above normal.

Chart Trends: Trends in New York are mixed. Support is at 105.50, 104.00, and 101.00 March, and resistance is at 109.00, 111.00, and 113.00 March. Trends in London are up with objectives of 1840 and 1970 January. Support is at 1680, 1660, and 1630 January, and resistance is at 1730, 1750, and 1770 January. Trends in Sao Paulo are mixed. Support is at 129.00, 128.00, and 125.00 March, and resistance is at 133.00, 135.00, and 136.50 March.

COTTON (NYBOT:CTH14)

General Comments: Futures closed higher in reaction to the USDA supply and demand estimates. Traders expected unchanged ending stocks estimates and got that at the expense of reduced production and demand. The bulls were encouraged by the good economic data released Friday. The data implied that demand for clothes can increase as more and more people go back to work. There are questions about demand in China as the government there has offered its supplies into the domestic market and as economic data there has been more mixed. Wire reports indicate that some production has been lost in China after some bad weather in some growing areas, but weather is better again now. Brazil conditions are reported to be very good in Bahia. Harvest in the US should be about done now as winter moves south. Charts show that the market could be completing a major low.

Overnight News: The Delta will be dry all week and Southeast should see some showers and snow through the middle of week, then dry conditions. Temperatures will average below normal this week and near normal this weekend. Texas will see dry conditions. Temperatures will average below normal this week and near normal this weekend. The USDA spot price is 77.53 ct/lb. today. ICE said that certified Cotton stocks are now 0.088 million bales, from 0.091 million yesterday.

Chart Trends: Trends in Cotton are mixed to up with objectives of 8310, 8690, and 8940 March. Support is at 79.60, 79.40, and 78.90 March, with resistance of 80.95, 81.70, and 82.20 March.

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