Tuesday, April 15, 2014

U.S. orange production hit by greening disease

By Jack Scoville


Orange Juice futures closed lower on long liquidation from the rally seen last week. Traders are back talking about weaker demand again and also about some showers that were reported in Brazil production areas over the last couple of days. Prices had rallied in response to the new production dta from USDA that showed lower production in Florida again. The greening disease has once again lowered U.S. Orange production estimates, and the disease will be around for a few more years. Weaker demand helps offset the losses from less production in Florida and also Brazil as consumers look to alternatives for Vitamin C. Brazil has seen dry weather might that be stressing trees as reports indicate that many áreas still need rain. There is none in the forecasts into the middle of next week. Florida harvest conditions remain good. The Valencia harvest is strong. Blooms are being reported in all parts of Florida and soil moisture conditions are reported to be mostly good due to recent rains. Some fruit is starting to appear. Florida is dry through this week.

Overnight News: Florida weather forecasts call for scattered showers through the weekend. Temperatures will average near to above normal. Brazil should be mostly dry and warm after some showers today. 

Chart Trends: Trends in FCOJ are mixed to up with objectives of 175.00 May. Support is at 160.00, 157.00, and 156.00 May, with resistance at 169.00, 172.00, and 175.00 May.


Coffee closed higher after trading both sides of unchanged. Speculators were the biggest players on both sides of the market. The roasters have been trying to wait out the rally and have either pulled back on offers or offered lower differentials. Producers have been offering, but were not really seen in the market yesterday. Declining production estimates for Brazil keep prices heading higher. Some estimates for production of the coming crop range as low as 40 million bags, although most estimates are still above 45 to 47 million bags. The weather remains dry in Coffee areas, and the harvest is expected to start early due to advanced maturation of the beans. Some rain was seen over the last couple of days, but it is expected to turn dry and warm again after today. Harvest could start in early May instead of the end of the month as would be normal. The Conillon harvest in northern Brazil is already started. London was lower. Exports have increased over the last couple of months as producers in Vietnam start to move stocks amid better prices.

Overnight News: Certified stocks are lower today and are about 2.587 million bags. The ICO composite price is now 176.59 ct/lb. Brazil will get showers today, then mostly dry weather. Temperatures will average near to above normal. Colombia should get scattered showers, and Central America and Mexico should get some showers in most areas. Temperatures should average mostly above normal.

Chart Trends: Trends in New York are mixed to up with objectives of 223.00 and 295.00 May. Support is at 200.00, 195.00, and 190.00 May, and resistance is at 209.00, 212.00 and 215.00 May. Trends in London are mixed. Support is at 2110, 2080, and 2050 May, and resistance is at 2150, 2180, and 2190 May. Trends in Sao Paulo are mixed to up with no objectives. Support is at 246.50, 240.00, and 238.00 September, and resistance is at 255.00, 258.00, and 261.00 September.


Cotton was higher in nearby months, but lower in deferred months. The price action overall has not been real strong, but Bulls seem unwilling to give up. Ideas of short domestic supplies available to the market supported nearby months. Demand is a problem as the market has seen selling due to reduced prices for Chinese government supplies and ideas that Chinese imports could be sharply curtailed in the coming months. The government is releasing some of its supplies to millers at competitive prices when compared to imports. The move by the Chinese government comes as the United States will plant more Cotton. China is the top destination for US exports. Brazil conditions are reported to be good in Bahia with warm temperatures and a few showers. India might have some production problems this year as El Nino is developing and might bring less monsoon rains to the country. Warmer temperatures are returning to production areas in the US and there has been some fieldwork done, at least in the Delta and Southeast. It is turning warmer and drier in the Delta and Southeast. The Texas Panhandle should be mostly dry through this week and needs some rain.

Overnight News: Delta and Southeast areas will get some drier weather after some big rains today. Temperatures will average near to above normal. Texas will see mostly dry weather. Temperatures will average near to below normal. The USDA spot price is 85.26 ct/lb. today. ICE said that certified Cotton stocks are now 0.275 million bales, from 0.274 million yesterday. USDA said that Cotton is now 8% planted, from 6% last week, 8% last year, and 9% average.

Chart Trends: Trends in Cotton are mixed. Support is at 90.00, 88.60, and 88.00 May, with resistance of 91.70, 92.40, and 93.20 May.


Sugar futures were lower on ideas of weak demand. Demand for world Sugar is said to be very light right now and the market seems to be looking for new buyers. Ideas are that most buyers have good coverage for now. Dry weather in Brazil remains an important market feature. Some showers were seen in production areas over the last couple of days. Forecasts now call for dry conditions to return through this week. Most other Sugar production areas around the world are in good condition. Futures remain in the overall trading range, and the fundamentals suggest that the range can hold for now, although futures could start to move to the lower end of the trading range in the short term. The Brazil crop needs regular rains after getting off to a very dry start. Dry conditions will return after today and crop stress is seen. There are worries that El Nino is starting and that it would reduce rains in India, but increase rains in Brazil. Thailand has been selling Sugar with steady to lower differentials. Weather conditions in key production areas around the world are rated as mostly good.

Overnight News: Brazil could see some showers today, then dry conditions and near to above normal temperatures.

Chart Trends: Trends in New York are mixed to down with objectives of 1700 and 1640 July. Support is at 1730, 1710, and 1685 July, and resistance is at 1760, 1790, and 1800 July. Trends in London are down with objectives of 454.00 and 442.00 August. Support is at 461.00, 458.00, and 455.00 August, and resistance is at 470.00, 477.00, and 478.00 August.


Cocoa closed slightly lower in low to moderate volume trading. Charts show that the markets remain in a big trading range. New grind data will appear soon to show demand and could force a trend change either higher or lower. Traders expect a year-to-year increase of 3% in the U.S. grind. Better than forecast production in West Africa and Asia has kept the rally from extending beyond the current highs. Midcrop offers have appeared in Nigeria and are also appearing in Brazil. Bears have not been able to break futures from the sideways longer-term range as overall the market remains tight on supplies and with enough demand to keep things that way. Mid crop conditions seem good in West Africa and generally good in Southeast Asia, although it remains a little too dry in Malaysia. The weather is also good in Brazil, with the midcrop flowering under favorable conditions.

Overnight News: Scattered showers are expected in West Africa. Temperatures will average mostly above normal. Malaysia and Indonesia should see scattered showers, with best amounts and coverage in Indonesia. Temperatures should average near to above normal. Brazil will get dry conditions or light showers and near to above normal temperatures. ICE certified stocks are lower today at 5.075 million bags.

Chart Trends: Trends in New York are mixed. Support is at 2975, 2960, and 2920 July, with resistance at 3035, 3050, and 3065 May. Trends in London are mixed. Support is at 1860, 1840, and 1825 July, with resistance at 1890, 1900, and 1930 July.

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