Cocoa moves higher, but rally running out of steam

COCOA (NYBOT:CCH14)

General Comments: Futures closed higher in range trading. Very little has changed fundamentally, and that could become a challenge for the bulls as the market needs news to keep the move higher intact. Speculators are long and might want to take some profits by the end of the year and that could increase selling pressure on futures. Supplies should be available now as the main crop harvest is still active in West Africa. Reports indicate that rains are minimal this week in West Africa, which should help harvest progress and processing progress. Much of West Africa is now reporting reduced production due to stressful conditions earlier in the growing season, but so far arrivals and purchases have been strong. Prices have been strong as well. The overall fundamental picture should support generally strong prices as the supply situation should be tight on strong demand. A good midcrop production is expected in the spring.

Overnight News: Mostly dry conditions are expected in West Africa. Temperatures will average mostly 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 3.314 million bags. LIFFE stocks are now 7,596 standard units, 193 large units, and 0 bulk units.

Chart Trends: Trends in New York are mixed. Support is at 2770, 2740, and 2730 March, with resistance at 2830, 2840, and 2870 March. Trends in London are mixed. Support is at 1740, 1710, and 1680 March, with resistance at 1775, 1790, and 1820 March.

COTTON (NYBOT:CTH14)

General Comments: Futures closed higher on what was called chart based buying. The USDA weekly export sales report was disappointing to the bulls and produced some early price weakness, but the buyers used the weakness to add to positions. The good economic data released Friday in the US and this week in China has helped support demand ideas. The data implied that demand for clothes can increase as more and more people go back to work here and that the Chinese economy is still in mostly good condition. Brazil conditions are reported to be very good in Bahia. Harvest in the US should be about done now as winter moves south. However, farmers are not selling much and certified stocks are dropping fast. Charts show that the market completed a major low.

Overnight News: The Delta and Southeast should see dry conditions except for some showers tomorrow. Temperatures will average near normal this weekend and near to above normal next week. Texas will see dry conditions. Temperatures will average near normal this weekend and above normal next week. The USDA spot price is 79.86 ct/lb. today. ICE said that certified Cotton stocks are now 0.058 million bales, from 0.059 million yesterday

Chart Trends: Trends in Cotton are up with objectives of 8310, 8690, and 8940 March. Support is at 81.80, 80.95, and 80.50 March, with resistance of 83.20, 83.60, and 84.00 March.

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