This probably won't help the line at Starbucks, but it might help your wallet

Coffee falls on Vietnam supply questions

COFFEE (NYBOT:KCH14)

General Comments: Futures closed lower on speculative selling tied to long liquidation. Traders are now working with production ideas for Brazil of about 54 to 55 million bags. There is also debate on how much coffee is getting offered from Vietnam as exports there remain below year-ago levels. Most insist the country will have to move a lot of coffee and that production near 29 million bags is accurate for the current year. However, bean sizes are reported to be small and could affect overall production levels. Buyers are now hoping for sales after the Tet holiday that happens at the end of the month as not much has been sold before the holiday. Differentials are steady at strong levels, and some roasters have been turning to Indonesia for supplies. Central American differentials are firm, and higher differentials are getting paid by roasters. Weather is reported to be good in all areas.

Overnight News: Certified stocks are lower today and are about 2.678 million bags. The ICO composite price is now 109.74 ct/lb. Brazil will get mostly dry conditions. 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 to down with objectives of 112.00, 110.00, and 106.00 March. Support is at 115.00, 113.00, and 112.00 March, and resistance is at 122.00, 124.00 and 125.00 March. Trends in London are mixed. Support is at 1690, 1670, and 1660 March, and resistance is at 1740, 1765, and 1800 March. Trends in Sao Paulo are mixed. Support is at 138.00, 136.00, and 135.00 March, and resistance is at 145.00, 147.00, and 149.00 March.

COTTON (NYBOT:CTH14)

General Comments: Futures closed higher on follow through buying based on strong demand ideas and less offer in the market. The export sales report was very strong when compared to the previous month, and domestic mills are said to be bidding below the market. There are chances that the improved demand can continue, but many will be willing to sell if the sales drop this week on ideas that the market has gotten away from the demand. Traders say that there is good demand at the chart support areas under the current price area as mills here and in other parts of the world need to get some coverage. China is the number one buyer of U.S. cotton, but others could be using the recent price weakness to gain coverage while China has been buying in smaller quantities. The US economy is improving slowly and should support increases in demand over time as people start to buy clothes again. Brazil conditions are reported to be very good in Bahia with light precipitation and warm temperatures.

Overnight News: The Delta and Southeast will see dry conditions. Temperatures will average below normal. Texas will see dry conditions. Temperatures will average above normal this weekend after a cold week. The USDA spot price is 84.34 ct/lb. today. ICE said that certified Cotton stocks are now 0.066 million bales, from 0.052 million yesterday.

Chart Trends: Trends in Cotton are up with objectives of 9000 March. Support is at 87.60, 87.00, and 86.00 March, with resistance of 89.00, 89.20, and 89.50 March.

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