Cocoa rally stalls despite expectation for tight supplies

COCOA (NYBOT:CCH14)

General Comments: Futures closed a little lower and appears to be having trouble extending the move higher. Traders are still looking for tight supplies and higher prices down the road. Arrivals from Ivory Coast and purchases from Ghana have been above expectations so far this year and at least as strong as last year. Production appears to have been underestimated due to the stronger than expected data from West Africa. A good midcrop production is expected in the Spring from Africa as weather now is good for the mid-crop development. It is the dry season, but showers have appeared and would mean a lot for trees and increased mid-crop production. It will turn drier again this weekend and whatever stress is there will increase. There is also talk of some losses in Indonesia and other countries in Southeast Asia from recent heavy rains, but the weather is drier there even though rains are seen every day.

Overnight News: Mostly dry expected in West Africa. Temperatures will average near to 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 to above normal temperatures. ICE certified stocks are lower today at 3.649 million bags.

Chart Trends: Trends in New York are up with objectives of 2940 and 2960 March. Support is at 2865, 2835, and 2800 March, with resistance at 2930, 2950, and 2980 March. Trends in London are up with no objectives. Support is at 1810, 1775, and 1760 March, with resistance at 1870, 1900, and 1930 March.

COTTON (NYBOT:CTH14)

General Comments: Futures closed higher in response to very strong export sales for the second week in a row. Vietnam and China were the best buyers. The price action yesterday left futures in a range as the market could not test support or resistance areas. Prices are high enough now to cut off some demand and also to make some producers consider increasing planted area next year. But, the market needs to keep seeing demand, and needs to see some planting intentions from producers to be able to make longer term judgments. It is possible that futures continue in a trading range between 82.00 and 87.00 basis nearby futures for a while. Brazil conditions are reported to be very good in Bahia with light precipitation and warm temperatures.

Overnight News: The Delta and Southeast will see more precipitation move from west to east this weekend. Temperatures will moderate this weekend before turning cold again next week. Texas will see dry conditions. Temperatures will average above normal into the weekend, then turn below normal again next week. The USDA spot price is 82.49 ct/lb. today. ICE said that certified Cotton stocks are now 0.158 million bales, from 0.146 million yesterday.

Chart Trends: Trends in Cotton are mixed. Support is at 85.00, 84.00, and 83.70 March, with resistance of 86.80, 87.00, and 88.20 March.

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