Cotton falls as export demand found wanting

COFFEE (NYBOT:KCH14)

General Comments: Futures closed higher after trading both sides of unchanged. Support is still coming from lower production estimates from Brazil that surfaced last week, where farmers are pruning trees and trees are resting after a couple of very big production cycles that pushed prices to levels below the cost of production. There is also debate on how much Coffee is getting offered from Vietnam. Reuters said this week that offers of Coffee from Vietnam had increased but others say they are still holding and waiting for better prices. Certified stocks in both markets are generally trending down. There was little interest noted by producers or roasters in any trading in Latin America although some roaster demand was noted. Central American differentials are turning firmer now as northern South America offers are much harder to find, and higher differentials are getting paid. Weather is reported to be good in all areas.

Overnight News: Certified stocks are lower today and are about 2.692 million bags. The ICO composite price is now 112.14 ct/lb. Brazil will get dry conditions through Wednesday, then showers. Temperatures will average 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 to up with objectives of 122.00 and 125.00 March. Support is at 117.00, 115.00, and 113.00 March, and resistance is at 122.00, 124.00 and 125.00 March. Trends in London are mixed to up with objectives of 1800 and 1880 March. Support is at 1690, 1670, and 1660 March, and resistance is at 1750, 1765, and 1800 March. Trends in Sao Paulo are mixed. Support is at 142.00, 138.00, and 136.00 March, and resistance is at 147.00, 149.00, and 151.00 March.

SUGAR (NYBOT:SBH14)

General Comments: Futures were higher on some speculative buying to close out the week. The market is still preoccupied about the large supply overhang in the market and Price action remains weak overall. Thai offers are stable as the harvest is very active there and differentials have been steady to lower. India was very active earlier but seems quieter now and there are some reports of production losses there. There have also been some disputes between the government and industry on pricing due to some new prices the government is paying to cane producers that make processing into Sugar a losing proposition there, but those issues are apparently getting resolved now. Brazil is offering less now that the harvest season is over, but still has Sugar to sell and will most likely have a big crop next year. Demand might be getting better, but still have not been able to change the trend much as confirmed big deals have been almost impossible to find. Weather conditions in key production areas around the world are rated as mostly good.

Overnight News: Brazil could see dry weather and above normal temperatures through Wednesday, then scattered showers and near to above normal temperatures.

Chart Trends: Trends in New York are down with objectives of 1500 March. Support is at 1520, 1490, and 1460 March, and resistance is at 1590, 1600, and 1620 March. Trends in London are down with no objectives. Support is at 423.00, 420.00, and 417.00 March, and resistance is at 432.00, 438.00, and 443.00 March.

COCOA (NYBOT:CCH14)

General Comments: Futures closed higher in New York and in London and both markets held to the recent trading range. Continued increases in certified stocks in New York have hurt the bull case and helped stall futures at current price levels. It appears that Cocoa is being delivered from Asia and Africa and registered for delivery against futures and some Latin American Cocoa is finding its way to certified warehouses as well. Arrivals in Ivory Coast and Ghana purchases remain strong. The main harvest should be coming to an end son in Africa. The overall fundamental picture should support generally strong prices as the supply situation should be tight on strong demand for the longer term. Ideas are that demand can remain above production for at least the next couple of years. Much of the increased demand should come from Asia. A good midcrop production is expected in the Spring from Africa as weather now is good for the mid-crop development. Asian growing conditions are reported to be good.

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 or light showers and near normal temperatures. ICE certified stocks are lower today at 3.709 million bags.

Chart Trends: Trends in New York are mixed. Support is at 2670, 2630, and 2580 March, with resistance at 2730, 2740, and 2765 March. Trends in London are mixed. Support is at 1700, 1680, and 1660 March, with resistance at 1730, 1750, and 1765 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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