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Softs update

COTTON(NYBOT:CTK14)

General Comments:  Futures closed lower on worries about the Chinese economy and expectations for weak export demand to continue.  Charts show that trends are down.  Demand for export has turned soft in the last week or so as see in the poor sales in the weekly USDA report last week.  The weak demand might continue as China has big supplies already and as news headlines on Friday featured the falling Chinese currency in recent weeks.  USDA projects tight ending stocks at the end of the current marketing year, and the cash market has been strong due to very limited offers.  The market is acting as if domestic mills have found enough Cotton for now.  Brazil conditions are reported to be good in Bahia with warm temperatures, but the state needs rain and does not have much coming if current forecasts prove accurate.  There was some rain over the weekend. 

Overnight News:  Delta and Southeast areas will get precipitation over the middle of the week.  Temperatures will average near to below normal.  Texas will see dry weather.  Temperatures will average near to below normal.  The USDA spot price is 82.31 ct/lb. today.  ICE said that certified Cotton stocks are now 0.259 million bales, from 0.257 million yesterday. 

Chart Trends:  Trends in May Cotton are mixed to down with objectives of 84.70¢ and 81.50.  Support is at 86.10, 85.40, and 84.80, with resistance of 88.20, 88.70, and 89.60.

FCOJ(NYBOT:OJK14)

General Comments:  Futures closed about a little lower as the weather stays good in Florida and the chances to freeze trees becomes less. Brazil has seen weather might that be stressing trees as reports indicate that many areas still need rain.  There was some rain to appear this weekend, and some more is possible early this week.  More rain would be beneficial in Florida, but harvest conditions remain good.  Harvest is starting to come to a close for early and mid-Oranges.  The Valencia harvest is expanding as the early harvest winds down.  Blooms are being reported in South Florida Brazil is seeing near to above normal temperatures.

Overnight News:  Florida weather forecasts call for mostly dry conditions today and tomorrow, then showers Wednesday and Thursday, then dry weather again.  Temperatures will average near to above normal.                   

Chart Trends:  Trends in May FCOJ are mixed. Support is at 144.50, 143.50, and 142.00; with resistance at 148.00, 149.00, and 150.00.

COFFEE(NYBOT:KCK14

General Comments: Futures closed higher as the market waits for rain for the dry areas in Brazil. There was some rain over the weekend in Brazil that could stabilize the situation, but the overall dry pattern should return near the middle of the week. Volcafe dropped its production estimate for Brazil again now estimates the crop near 42 million bags.  It also looks for a world production deficit as opposed to the surplus everyone was looking for just a month or two ago.  Trends are up in all three markets.  The main focus of the market is still on Brazil.  The lack of rain in Coffee producing areas over the last month has hurt Coffee production potential as the crop was forming cherries.  It could take a few months before the losses are truly known as the next harvest will not begin until May.  Traders also keep waiting for more Coffee to appear from Vietnam.  Exports so far this year from Vietnam have been disappointing and well below the level of last year, although February exports were above the year ago pace.  The market needs that Coffee to be exported to help fill the vacuum left by the poor production in Brazil and will probably have to pay up to entice Vietnamese producers to sell.  However, there is always the chance that the production there was overestimated as sales have been slow and reports indicate that the offer from Vietnam is less again.

Overnight News:  Certified stocks are lower today and are about 2.614 million bags.  The ICO composite price is now $1.5753 per lb.  Brazil will get showers and storms.  Temperatures will average near to above normal.  Colombia should get scattered showers, and Central America and Mexico should get mostly dry weather, although some showers are expected in Eastern Mexico.  Temperatures should average near to above normal. 

Chart Trends:  Trends in New York are mixed to up with no objectives of $1.8900 and $2.0400 for the May contract.  Support is at $1.71, $1.68, and $1.62 May, and resistance is at $1.8100, $1.8300 and $1.8600.  Trends in London are mixed to up with objectives of $2.09.  Support is at 2010, 1990, and 1935 May, and resistance is at 2080, 2110, and 2140.  Trends in Sao Paulo are up with no objectives. 

SUGAR(NYBOT:SBK14)        

General Comments:  Futures were lower as traders liquidated long positions as March is now off the board and as forecasts for rains for Brazil production areas were noted.  The precipitation could continue through today and tomorrow.  Rains now could help the crop recoup some of the losses if there is enough rain.  Sugar areas should do better than Coffee areas this weekend, but more rain will be needed son and there does not appear to be much showing in the forecast after the weekend event. Charts show that short term trends up.  Thai Raw Sugar differentials are steady.  Weather conditions in key production areas around the world are rated as mostly good except for the dry weather in Brazil. 

Overnight News:  Brazil could see dry weather and near to above normal temperatures.  Better precipitation is likely this weekend. 

Chart Trends: Trends in New York are mixed to up with objectives of 1870 and 1970 got May.  Support is at 17.30, 1700, and 1685 for May, and resistance is at 1810, 1825, and 1845.  Trends in London are up with no objectives.  Support is at 471.00, 464.00, and 462.50 May, and resistance is at 485.00, 488.00, and 493.00 May.

COCOA         

General Comments:  Futures closed slightly higher in range trading as traders look for news to push prices in one direction or the other.  The main news item came from the ICCO, who increased its world production deficit estimate this year by a little bit to 115,000 tons.  There is not a lot of demand news around, but the demand has been solid and the main West Africa harvest is about over.  Butter ratios remain strong on ideas of short supplies of Cocoa Butter in Europe and North America.  Asian demand has been strong and Indonesia is importing beans for processing.  A good midcrop production is possible from Africa, but producers say more rain is needed, especially in central and northern areas.  Some showers are reported in southern areas that will help. 

Overnight News:  Mostly dry expected in West Africa, but a few showers are expected in southern areas.  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 higher today at 4.117 million bags. 

Chart Trends:  Trends in New York are mixed.  Support is at 2930, 2890, and 2875 May, with resistance at 3000, 3020, and 3050 May.  Trends in London are mixed.  Support is at 1830, 1800, and 1780 May, with resistance at 1870, 1900, and 1930 May.

 

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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