Cocoa's trading range rut

Softs Report

COTTON (NYBOT:CTN14)

Futures were mixed in consolidation trading. USDA reported relatively strong export sales to help support demand ideas. Weather remains too wet in the Delta and Southeast and too dry in much of Texas, although the eastern two thirds of the state or more has seen some precipitation this week. Panhandle áreas are under Deep stgress from drought conditions that should also impact irrigated crops. Farmers made very little progress last week as weather in Texas and the Southeast has not been that good. Brazil conditions are reported to be good in Bahia with warm temperatures and a few showers. India might have some production problems this year as El Nino is developing and might bring less monsoon rains to the country.

Overnight News: Delta and Southeast áreas will get big rains. Temperatures will average near to above normal. Texas will see mostly dry weather most of this week. Temperatures will average near to above normal. The USDA spot price is 86.14 ct/lb. today. ICE said that certified Cotton stocks are now 0.304 million bales, from 0.300 million yesterday.

Chart Trends: Trends in Cotton are mixed. Support is at 91.50, 90.75, and 90.50 May, with resistance of 93.50, 94.85, and 96.75 May.
 

COCOA

Futures closed lower as some mid crop offers started to increase. Charts show that the markets remain in a big trading range. Bette than forecast production in West Africa and Asia has kept the rally from extending beyond the current highs, but many analysts expect the market to work higher longer term due to projections of short production against demand over the long term. Midcrop offers are showing in most of West Africa as production ideas remain generally strong. Bears have not been able to break futures from the current sideways range as overall the market remains tight on supplies and with enough demand to keep things that way. Crop conditions are good in West Africa and generally good in Southeast Asia, although it reamins too dry in Malaysia. The weather is also good in Brazil

Overnight News: Scattered showers are expected in West Africa. Temperatures will average mostly above normal. Malaysia and Indonesia should see scattered showers, with best amounts and coverage in Indonesia. Temperatures should aeaverage 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 5.359 million bags. 

Chart Trends: Trends in New York are mixed. Support is at 2920, 2900, and 2880 July, with resistance at 3000, 3035, and 3050 May. Trends in London are mixed. Support is at 1840, 1825, and 1800- July, with resistance at 1870, 1890, and 1900 July.

 

FCOJ (NYBOT:OJN14)

Futures closed lower on some long liquidation. May closed lower on some long liquidation before deliveries start this week. Trends for May turned down with the Price action Friday, but trends in other months remain more bullish. Price action overall remains mixed as the market needs some new bullish input to mainain higher prices. Traders are talking about weaker demand, but supplies remain tight. Production áreas in Brazil need more precipitation, but will not get much more this week. Weak overall Florida production and the overall dry weather in Brazil that could impact production there continues to support prices longer term. The greening disease has sharply reduced US Oranges production estimates, and the disease will be around for a few more years as there is no easy cure. Florida harvest conditions remain good. The Valencia harvest is strong. Soil moisture conditions are reported to be mostly good in Florida. Fruit is seen in all areas.

Overnight News: Florida weather forecasts call for mostly dry weather. Temperatures will average near normal. Brazil should be mostly dry and warm, but a few showers are posible this week.

Chart Trends: Trends in FCOJ are mixed. Support is at 162.00, 160.00, and 157.00 May, with resistance at 164.00, 167.00, and 168.00 May.

 

COFFEE (NYBOT:KCN14)

Futures closed lower on long liquidation before the weekend. Prices have held higher in reaction to Volcafe estimates showing sharply lower production for Brazil and the potential for a significant supply against demand déficit for the coming year. Volcafe estimated all Brazil production at about 45.5 million bags for the current harvest and expects another short crop next year. It said the world production estimate could be about 11 million bags this year. The Brazil harvest is underway and the market is looking for news on actual yields. Overall production is expected to be sharply lower after the drought in Coffee áreas during January and February. The harvest has started early due to advanced maturation of the beans, and some harvesting has already been done in some areas. The main part of the harvest could start in early May instead of the end of the month as would be normal.

Overnight News: Certified stocks are lower today and are about 2.573 million bags. The ICO composite price is now 177.36 ct/lb. Brazil will get mostly dry weather, but some precipitation today. Temperatures will average near to above normal. Colombia should get scattered showers, and Central America and Mexico should get some showers in most áreas, but will be mostly dry. Temperatures should average mostly above normal.

Chart Trends: Trends in New York are mixed to up with objectives of 228.00 and 250.00 July. Support is at 202.50, 199.00, and 192.50 July, and resistance is at 212.00, 219.00 and 222.00 July. Trends in London are mixed to up with objectives of 2260 and 2380 July. Support is at 2120, 2050, and 2020 July, and resistance is at 2200, 2215, and 2230 July. Trends in Sao Paulo are mixed to up with objectives of 276.00 and 299.00 September. Support is at 254.50, 250.00, and 238.50 September, and resistance is at 266.00, 269.00, and 272.00 September.

 

SUGAR  

Futures were lower on some long liquidation. Ideas that the Brazil harvest is underway is keeping the market in a trading range, even with better demand. However, futures are now trading the upper end of the trading range and can work higher. World weather conditions are generally good. El Nino is probably coming that could hurt yields and disrupt the harvest later in the year, but for now the drier weather promotes rapid harvest progress. Big El Nino rains in Brazil during harvest could dilute Sugar content and hurt quality and overall production potential. On the other hand, dry weather could affect Indian and perhaps Southeast Asian Sugar production.  

Overnight News: Brazil could see some dry conditions after a few showers today and near to above normal temperatures.

Chart Trends: Trends in New York are mixed to up with objectives of 1850 and 1925 July. Support is at 1760, 1720, and 1710 July, and resistance is at 1800, 1840, and 1855 July. Trends in London are mixed to up with objectives of 491.00 and 509.00 August. Support is at 473.00, 461.00, and 458.00 August, and resistance is at 482.00, 487.00, and 491.50 August.

 

 

 

 

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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