Wednesday, September 11, 2013

Coffee falls as Brazilian real shows signs of weakness

By Jack Scoville


General Comments: Futures were lower in all markets and the Brazilian real showed signs of moving lower again. The cash market seemed relatively quiet. Most Brazil coffee producers are not offering much right now, and few in Central America seem interested in selling. 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 2.782 million bags. The ICO composite price is now 112.21 ct/lb. Brazil should get dry conditions. 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. Colombia produced 770,000 bags of Coffee in August. Production for the last 12 months now totals 9.6 million bags, up 26% from the previous 12 months. In Brazil, Conab expects production to be 47.5 million bags for this year, including 36.7 million bags of Arabica and 10.9 million bags of Robusta.

Chart Trends: Trends in New York are mixed. Support is at 116.00, 114.00, and 111.00 December, and resistance is at 120.00, 122.00, and 125.00 December. Trends in London are mixed. Support is at 1740, 1730, and 1720 November, and resistance is at 1770, 1800, and 1825 November. Trends in Sao Paulo are down with objectives of 134.50 and 123.50 December. 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 closed higher as traders started to get ready for the USDA reports on Thursday. The market had dropped a lot over the last couple of weeks and now the bears are buying out short positions to get even before the reports. Many areas are turning hot and dry again, and this created some buying interest as well. China issued some positive economic data over the weekend to help demand ideas stay afloat after the stronger than expected export sales report from last week. 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. The market is getting ready for the harvest, and any rallies now might be very limited in scope.

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 81.32 ct/lb. ICE said that certified Cotton stocks are now 0.018 million bales, from 0.018 million yesterday.

Chart Trends: Trends in Cotton are mixed to up with no objectives. Support is at 83.90, 82.80, and 82.30 October, with resistance of 85.05, 85.30, and 86.00 October.


General Comments: Futures closed a little lower as tropical storm formed in the Eastern Atlantic. 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 historically biggest part of the season is coming up. 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. Support is at 134.00, 131.00, and 129.00 November, with resistance at 139.00, 140.00, and 142.00 November.


General Comments: Futures closed higher on reports of less production from Brazil. UNICA said that mills in Brazil's main sugar-cane growing region produced 3.2 million metric tons of sugar in the second half of August, down 3.7% from last year. Ethanol production from the region increased 8.3% to 2.1 billion liters. There is not much on offer in the cash market for now, and that is helping Sugar futures hold the recent range. Processors in Brazil remain more interested in Ethanol production. There is good weather for Sugar production in India, and the crop is expected to be big there. Countries like Thailand and India also 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. Short term trends are now sideways.

Overnight News: Brazil could see dry weather and moderate temperatures. Pakistan will allow exports of 500,000 tons of Sugar this year.

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 1765, 1780, and 1810 March. Trends in London are up with objectives of 494.00 December. Support is at 486.00, 479.00, and 475.00 December, and resistance is at 494.00, 496.00, and 501.00 December.


General Comments: Futures closed higher in consolidation trading. There is not much offer now as West Africa is between crops. 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. Ivory Coast arrivals are now 1.372 million tons, from 1.359 million last year. 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 4.504 million bags.

Chart Trends: Trends in New York are up with objectives of 2610 and 2720 December. Support is at 2540, 2525, and 2505 December, with resistance at 2590, 2605, and 2620 December. Trends in London are up with objectives of 1710 and 1770 December. Support is at 1670, 1660, and 1650 December, with resistance at 1710, 1740, and 1770 December.

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