Going cuckoo for cocoa

COCOA (NYBOT:CCH14)

General Comments: Futures closed higher in consolidation trading. However, price action overall remains weak. Supplies from West Africa have increased and the market has more Cocoa to work with for at least the short term. Arrivals from Ivory Coast and purchases from Ghana have been above expectations so far this year and at least as strong as last year. Arrivals from Ivory Coast are now more than 1.0 million tons. Production appears to have been underestimated due to the stronger than expected data from West Africa. A good mid-crop production is expected in the Spring from Africa as weather now is good for the mid-crop development, although some producers are worried that the current weather is too dry. It is the dry season, but a shower would mean a lot for trees and increased mid-crop production. There is also talk of some losses in Indonesia and other countries in Southeast Asia from recent heavy rains. Asian growing conditions are reported to be good.

Overnight News: Light showers 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 to down with objectives of 2660 and 2450 March. Support is at 2660, 2630, and 2580 March, with resistance at 2740, 2770, and 2800 March. Trends in London are mixed to down with objectives of 1650 March. Support is at 1700, 1675, and 1660 March, with resistance at 1750, 1760, and 1775 March.

COTTON (NYBOT:CTH14)

General Comments: Futures closed lower on ideas that futures were overbought after the recent strong rally. 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. USDA will release its export sales report on Friday due to the holiday on Monday. 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. The U.S. and world economies are 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 84.06 ct/lb. today. ICE said that certified Cotton stocks are now 0.069 million bales, from 0.066 million yesterday.

Chart Trends: Trends in Cotton are up with objectives of 9000 March. Support is at 87.00, 86.70, and 86.00 March, with resistance of 88.20, 89.00, and 89.20 March.

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