Thursday, September 12, 2013

Sugar sees production fall in Brazil, but fails to rally

By Jack Scoville


General Comments: Futures traded higher on early follow-through buying tied to less production in Brazil, but closed a little lower as the rally started to fail as crude oil futures worked lower. 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. The demand for ethanol makes Sugar futures sensitive to moves in the energy complex. There is not much on offer in the cash market for now, and that is helping Sugar futures hold the recent range. 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. Prices appear 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.


General Comments: Futures closed little changed as traders started to get ready for the USDA reports today. The market expects USDA to show good production and good supplies. 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 81.36 ct/lb. ICE said that certified Cotton stocks are now 0.018 million bales, from 0.018 million yesterday. USDA said that net Upland Cotton export sales were 134,400 bales this year and 19,800 bales next year. Net Pima sales were 16,000 bales this year and 0 bales next year.

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 lower as a hurricane formed in the Eastern Atlantic. The report created some initial buying, but the support from the storm quickly faded. 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. 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 were sharply higher in all markets as Brazil began to roll out details of its support program for producers. It will provide R$284 million for storage costs and about R$242.6 million for working capital for producers. There was also talk that current dry weather in Brazil could hurt the flowering for the next crop. The news cause a lot of short covering, but most traders are still bearish longer term on big world supplies. 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 higher today and are about 2.785 million bags. The ICO composite price is now 114.69 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.

Chart Trends: Trends in New York are mixed to up with objectives of 123.00 and 127.00 December. Support is at 119.00, 116.00, and 114.00 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 closed near unchanged after an early rally attempt failed. Cocoa is between crops, but has rallied a lot and might start to correct lower now. The move lower could last generally through the end of the year as the main crop harvest is not that far away. 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 4.491 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 2590, 2605, and 2620 December. Trends in London are mixed. Support is at 1670, 1660, and 1650 December, with resistance at 1710, 1740, and 1770 December.

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