Sugar needs rain soon
Sugar prices closed unchanged to lower after trading higher during the session.
The buying interest came from the weaker U.S. dollar index, but the Brazilian real was even weaker and sugar lost its upside momentum. Traders in London said that demand for white sugar is good, but demand for raw sugar is not the best right now. There is white sugar to be had as Thailand is still offering and as India is thought to have a lot to sell. India has years of supplies to sell and export and might have to start moving these supplies as the government there is finally forcing mills to pay producers for the sugarcane.
Another big crop is coming in India but there are questions as to just how big it will be. The southwest quarter of the country has missed a lot of the monsoon rains and this is where about a quarter of the sugarcane is grown. These crops need rain soon, as do the crops in Thailand. Brazil sugarcane production conditions have been good, and the harvest has been strong. Some areas have seen a lot of rain recently, and UNICA reflected the slower harvest in the data it released last week.
Drier weather is forecast for this week. Chinese demand has been very strong, but traders wonder if the demand can continue given the recent economic developments there. Demand in other parts of the world is characterized as average at best.
Overnight News: Brazil could see mostly dry conditions. Temperatures should average near to above normal.
Chart Trends: Trends in New York are down with objectives of 1115 October. Support is at 1120, 1090, and 1060 October, and resistance is at 1150, 1165, and 1190 October. Trends in London are mixed to down with objectives of 343.00, 333.00, and 320.00 October. Support is at 346.00, 345.00, and 342.00 October, and resistance is at 353.00, 355.00, and 357.00 October.
Futures were lower and began a new leg down on the cotton charts. Weakness came from the move lower seen in the Chinese stock market. China has been a major buyer in world markets until the last couple of years, and ideas are that the economic problems there could hurt additional demand growth for this year and into next year. The United States and India have been major sellers to China in the past, but neither country is selling much to the Chinese right now as the government already owns about half of the world supply.
The U.S. weather situation is better as warmer and drier weather is seen in all major U.S. production areas. World weather has improved as well, especially in India. That country is now forecasting a record crop as monsoon rains have been very good in northern production areas and on into Pakistan. USDA showed that the crop progress is holding about a week behind the average, and that crop condition ratings are mostly stable.
Overnight News: The Delta and the Southeast should see mostly dry conditions. Temperatures should average near to above normal. Texas will see dry conditions. Temperatures will average near to above normal. The USDA spot price is 61.15 ct/lb. today. ICE said that certified cotton stocks are now 120,060 bales, from 122,861 bales yesterday.
Chart Trends: Trends in cotton are down with objectives of 6300, 6280, and 6150 December. Support is at 6350, 6320, and 6310 December, with resistance of 6425, 6460, and 6500 December.