Tuesday, July 16, 2013

Coffee moves higher on forecasts for cold, wet Brazil weather

By Jack Scoville


General Comments: Futures were higher in New York on speculative buying tied to some forecasts for colder and wetter conditions for Brazil coffee areas starting this weekend. No forecast is calling for damaging temperatures, but the market is short. In addition, the rain could disturb the last of the harvest. London moved higher on some buying tied to fewer offers from Vietnam on ideas that producers there are about sold out. Offers of Arabica from origin are still hard to find and feature strong differentials. Demand was not much stronger than the offer and the cash market remains very quiet. Brazil weather is forecast to show dry conditions, but no cold weather. It could turn wetter and colder this weekend. Current crop development is still good this year. Central America crops are seeing moderate to light rains. Colombia is still reported to have good conditions.

Overnight News: Certified stocks are a little higher today and are about 2.745 million bags. The ICO composite price is now 119.41 ct/lb. Brazil should get dry weather except for some showers in the northeast. Temperatures will average near to above normal. Colombia should get scattered showers, and Central America and Mexico should get showers, and rains. Temperatures should average near to above normal. ICE said that 0 delivery notices were posted against July today and that total deliveries for the month are now 811 contracts. Safras e Mercados said that Brazil producers have sold 91% of the current production and 13% of the next production, both a little above averages. GCA stocks are now 5.201 million bags, from 5.147 million at the end of May.

Chart Trends: Trends in New York are mixed. Support is at 121.00, 119.00, and 117.00 September, and resistance is at 125.00, 126.00, and 127.00 September. Trends in London are up with objectives of 1940 and 1980 September. Support is at 1860, 1820, and 1790 September, and resistance is at 1940, 1950, and 1975 September. Trends in Sao Paulo are mixed. Support is at 140.00, 137.00, and 134.00 September, and resistance is at 148.00, 150.00, and 151.00 September.


General Comments: Futures were mixed in quiet trading. After the close, USDA showed marginal deterioration in crop conditions. The conditions had been mostly anticipated by the trade. Parts of the Southeast are getting too much rain and Texas growing areas remain mostly hot and dry. However, temperatures turned much cooler in Texas yesterday and rain was reported in central parts of the state. Conditions in Alabama, Mississippi, and Missouri are below average now, but will see warm temperaturas and some showers this week, with most of the precipitation in Eastern and southern areas. It is possible that futures can continue to work lower as demand has turned soft, but production and weather might be more important in the short term. Weather for Cotton appears good in India, Pakistan, and China. China says it will work to reduce the big supplies it has in government storage. It has been trying to auction Cotton to domestic mills, but the asking prices are too high and the quality offered by the government is said to be not good.

Overnight News: The Delta and Southeast will see showers and rains through the week, mostly in southern and Eastern areas. Temperatures will average near to above normal. Texas will see some showers early this week and drier weather later this week. Temperatures will average near to below normal today and tomorrow, then will trend to above normal. The USDA spot price is now 81.00 ct/lb. ICE said that certified Cotton stocks are now 0.540 million bales, from 0.540 million yesterday.

Chart Trends: Trends in Cotton are down with objectives of 83.00 October. Support is at 84.00, 83.10, and 82.80 October, with resistance of 86.00, 86.50, and 87.00 October.


General Comments: Futures closed mixed in quiet trading. Futures made a new high for the move, but lacked a good reason to move much higher as growing conditions in the state of Florida remain mostly good. Showers and storms are reported and conditions are said to have improved in almost the entire state. Ideas are that the better precipitation will help trees fight the greening disease. Temperatures are warm in the state, but the precipitation is the key right now. The tropics appear quiet and there are no storms in view. Brazil is seeing near to above normal temperatures and mostly dry weather.

Overnight News: Florida weather forecasts call for showers. Temperatures will average near normal.

Chart Trends: Trends in FCOJ are up with objectives of 145.00 and 155.00 September. Support is at 136.50, 134.00, and 132.00 September, with resistance at 140.00, 143.00, and 145.00 September.


General Comments: Futures closed a little higher on forecasts for cooler and wetter conditions to develop in Brazil this weekend and on a tender from Iraq to buy at least 50,000 tons of White Sugar. Iraq will probably buy much more than that. Bears were unable to keep the selling pressure on today despite bearish fundamentals, and prices have been able to hold above 1600 NY October until now. Futures trends remain down overall and price action has been weak. Many expect production to be higher overall in Brazil due to a record Sugarcane production and better weather now, and countries like Thailand and India also expect more production this year. The Indian monsoon is good so far this season and this should help with Sugarcane production in the country. Northern areas are in good shape, but southern areas might be too hot and dry and some stress to the Sugarcane is possible in the short term. In addition, industry sources there told wire services this week that planted area is down by about 5% and that overall production would be lower even with very good weather. Less production of Sugar beets is reported from Russia and Ukraine as farmers there elected to plant more grains. Traders will keep an eye on Ethanol demand and see if the production of Ethanol continues to siphon Sugar from the market.

Overnight News: Brazil should be mostly dry and warm this week, but could see colder and wetter weather this weekend.

Chart Trends: Trends in New York are down with objectives of 1580 October. Support is at 1600, 1570, and 1540 October, and resistance is at 1630, 1650, and 1665 October. Trends in London are down with objectives of 448.00 October. Support is at 460.00, 457.00, and 454.00 October, and resistance is at 466.00, 470.00, and 476.00 October.


General Comments: Futures closed a little lower on what was called speculative long liquidation tied to less than expected grind demand from Europe. The European Grind for the second quote was released yesterday morning and was 310,408 tons, up 6.1% from last year. Traders had been expecting about a 10% increase. The Asian grind was 72,191 tons, down 3.1% from last year. The US data should be out Thursday. Ideas of good harvest weather in western Africa remain, although some areas might be seeing some delays from showers and storms passing through the region. Ghana and Nigeria would appear to have the most problems with the rains, and it remains a little too dry i many parts of Ivory Coast. The cash market in Africa is slow right now as buyers have already bought and are now waiting to see how the main crop turns out late this year. The weather is good in West Africa, with more moderate temperatures and some rains. A few showers are appearing again in Ivory Coast this week, but Ivory Coast will still need more rain. Other west African countries are reported to have good conditions. Malaysia and Indonesia crops appear to be in good condition and weather is called favorable.

Overnight News: Scattered showers are expected in West Africa. Temperatures will average near to above normal. Malaysia and Indonesia should see episodes of isolated showers. Temperatures should average near normal. Brazil will get mostly dry conditions and warm temperatures. ICE certified stocks are lower today at 4.822 million bags. ICE said that 4 delivery notices were posted today and that total deliveries for the month are 382 contracts.

Chart Trends: Trends in New York are mixed to up with objectives of 2260 September. Support is at 2210, 2165, and 2130 September, with resistance at 2260, 2280, and 2300 September. Trends in London are mixed to up with objectives of 1590 and 1640 September. Support is at 1530, 1500, and 1460 September, with resistance at 1560, 1570, and 1590 September.

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