Friday, September 13, 2013

Cocoa rises as certified stocks dwindle

By Jack Scoville


General Comments: Futures closed higher on ideas of little offer in the cash market and dropping certified stocks in New York at the exchange. Cocoa is between crops, and producers have already priced a comfortable amount of the coming crop and feel no need to sell more now. The lack of offer comes at a time when rains have returned to West Africa. Ideas are that crop conditions there are generally improving. West Africa is expected to get scattered showers, and conditions there are said to be improving for almost all producers. Temperatures are moderate. The harvest will be getting underway soon. Malaysia and Indonesia crops appear to be in good condition and weather is called favorable. Nigerian farmers are drying Cocoa now that rains have passed and the weather has improved. Drying has been delayed over the last couple of weeks from too much rain.

Overnight News: Scattered showers are expected in West Africa. Temperatures will average near normal. Malaysia and Indonesia should see scattered showers, but southern areas could be dry. Temperatures should average above normal. Brazil will get mostly dry conditions and warm temperatures. ICE certified stocks are lower today at 4.466 million bags.

Chart Trends: Trends in New York are mixed to up with objectives of 2610 and 2720 December. Support is at 2540, 2525, and 2505 December, with resistance at 2605, 2620, and 2650 December. Trends in London are mixed. Support is at 1670, 1660, and 1650 December, with resistance at 1710, 1740, and 1770 December.


General Comments: Futures closed higher as USDA reduced production potential for the US crop this year. The world data showed increased world supplies and was not considered bullish. Futures initially moved lower on the world data, but then rallied as traders took another look at the reduced production that offset an estimate for reduced demand for US Cotton. Futures could be starting a new leg higher. US crop development remains behind due to delayed planting this year, but crop conditions right now are generally good. Weather is warm in the US, with the Delta and the Southeast expecting above normal temperatures into the weekend. Texas is dry and warm. Weather for Cotton still appears good in India.

Overnight News: The Delta will be dry and Southeast will see a few showers late in the week. Temperatures will average above normal in the Delta and mostly above normal in the Southeast. Temperatures should start to turn cooler this weekend. Texas will see dry weather. Temperatures will average above normal. The USDA spot price is now 82.41 ct/lb. ICE said that certified Cotton stocks are now 0.017 million bales, from 0.018 million yesterday.

Chart Trends: Trends in Cotton are up with no objectives. Support is at 85.00, 83.90, and 82.80 October, with resistance of 86.00, 86.50, and 88.10 October.


General Comments: Futures closed higher on the data released by USDA yesterday that showed poor yields from harvested oranges. The report implies that Oranges are small and do not have enough juice. The poor quality of the crop is most likely due to earlier drought conditions and the greening disease. A hurricane in the Eastern Atlantic was not a force in the price action today.. The storm is not going to come anywhere close to Florida, but it gave traders a reason to buy, anyway. The storm shows that the conditions in the Atlantic might be improving. The historical peak of the season has just passed. There are still no real threats showing in the tropical Atlantic for Florida. Growing conditions in the state of Florida remain mostly good. Showers are reported and conditions are said to be very good in almost the entire state. Temperatures are warm. Brazil is seeing near normal temperatures and mostly dry weather, but production areas will turn warmer again this weekend.

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

Chart Trends: Trends in FCOJ are mixed to up with no objectives. Support is at 137.50, 134.00, and 131.00 November, with resistance at 140.00, 142.00, and 144.00 November.


General Comments: Futures were a little lower in consolidation trading. There was talk that current dry weather in Brazil could hurt the flowering for the next crop, but some forecasts expect the rains to develop by the end of this month. Most traders are still bearish longer term on big world supplies, but the bears have been unable to force new lows and the market action appears to be more like at least a short term bottom. Coffee appears to be available in Central America as farmers and mills clear inventories before the next harvest. Colombia is offering Coffee into the cash market at weaker differentials. Buyers are said to be well covered. Current crop development is still good this year in most production areas of Latin America. Central America crop conditions are said to be good overall. Colombia is still reported to have good conditions. Harvest conditions are good in Brazil.

Overnight News: Certified stocks are lower today and are about 2.783 million bags. The ICO composite price is now 114.15 ct/lb. Brazil should get dry conditions through the weekend and some showers next week. 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.

Chart Trends: Trends in New York are mixed to up with objectives of 123.00 and 127.00 December. Support is at 116.00, 114.00, and 111.00 December, and resistance is at 122.00, 125.00, and 127.00 December. Trends in London are mixed. Support is at 1740, 1730, and 1720 November, and resistance is at 1800, 1825, and 1840 November. Trends in Sao Paulo are mixed. Support is at 139.00, 137.00, and 134.00 December, and resistance is at 145.50, 148.50, and 150.50 December.


General Comments: Futures traders higher on news that USDA will trade Sugar for import credits in another effort to reduce supplies and keep the market afloat. The program will help remove supplies from the market and cut imports, but is not considered a final solution. USDA is trying to avoid taking a lot of Sugar into its hands once the loans from the government programs expire at the end of the month. But, there will still be a lot of Sugar around, as USDA showed in its reports yesterday. Thailand and India expect more production this year, and both countries are actively offering their supplies into the world market. Demand for ethanol has been good. Chinese demand has been soft, but Middle East demand is good. Price appears to be in a trading range for now due to solid demand and big production.

Overnight News: Brazil could see dry weather and moderate temperatures.

Chart Trends: Trends in New York are up with objectives of 1780 March. Support is at 1740, 1710, and 1700 March, and resistance is at 1780, 1810, and 1840 March. Trends in London are up with no objectives. Support is at 488.00, 486.00, and 479.00 December, and resistance is at 496.00, 501.00, and 505.00 December.

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