Tuesday, April 1, 2014

Weak demand in OJ offsets losses from less production

By Jack Scoville


Futures closed higher despite some bearish demand news today. Neilsen said that Orange Juice consumption for the last four weeks was 43.55 million gallons, down 5.3% from last year. The weaker demand helps offset the losses from less production in Florida. The market will stay worried about the potential loss of demand and knows it is too early to worry about the hurricane season, which is the next major production risk for weather. Greening Disease and reduced Florida production keeps the prices supported. Brazil has seen weather might that be stressing trees as reports indicate that many áreas still need rain. Some forecasts call for rainnin production áreas this week. Florida harvest conditions remain good. The Valencia harvest is strong. Blooms are being reported in all parts of Florida. Demand remains a big problem for the bulls. Many consumers continue to look for other sources of nutrition that is found in Orange Juice due to the higher prices that are coming from the lower production in Florida and Brazil.

Overnight News: Florida weather forecasts call for mostly dry conditions. Temperatures will average near to above normal. Brazil should be mostly dry and warm. 

Chart Trends: Trends in FCOJ are mixed. Support is at 151.00, 147.00, and 144.00 May, with resistance at 155.00, 156.00, and 157.00 May.

Cotton (NYBOT:CTK14)

Futures were mixed, with nearby months a little lower and new crop months a little higher. USDA showed that farmers intend to plant 11.1 million acres of Cotton this year, from 10.4 million last year. The report was in line with trade expectations. The market had absorbed some selling due to news of reduced prices for Chinese government supplies. The move by the Chinese government is designed to reduce government stocks and cut import demand. The domestic cash market remains tight and is supporting futures prices in the front months, but exporters have told wire services that export demand is vey soft. Most producers appear to be sold out, and spinners in the east are forced to pay up to get supplies. Charts suggest that prices can work higher over the next couple of weeks. Brazil conditions are reported to be good in Bahia with warm temperatures and a few showers. Warmer temperatures are slowly returning to production áreas in the US and there has been some fieldwork done. It is a Little wet and cool in the Delta and Southeast. The Texas Panhandle should be mostly dry this week.

Overnight News: Delta and Southeast áreas will get dry weather today and some showers over the second half of the week. Temperatures will average above normal. Texas will see mostly dry weather. Temperatures will average above normal through Thursday, then near to below normal. The USDA spot price is 87.69 ct/lb. today. ICE said that certified Cotton stocks are now 0.254 million bales, from 0.254 million yesterday.

Chart Trends: Trends in Cotton are mixed to up with objectives of 9835 May. Support is at 91.80, 91.50, and 90.50 May, with resistance of 94.80, 95.20, and 95.80 May.

Coffee (NYBOT:KCK14)

Futures closed lower on forecasts for rains to appear this week in Coffee áreas of Brazil. The rains in March have been beneficial, and production has become more stable. London was slightly lower, but stays supported by the possibility of production losses for the next crop in Vietnam. Exports have increased over the last couple of months as producers there start to move stocks amid better prices. However, there are still some fers of less production in the coming year due to dry conditions at flowring time. The lack of rain in Coffee producing áreas of Brazil since the beginning of the year has hurt Coffee production potential and losses are expected once the harvest starts in a month or so. Cash markets have become more animated in the last few weeks in Latin America and roasters are showing more buying interest.

Overnight News: Certified stocks are lower today and are about 2.585 million bags. The ICO composite price is now 158.90 ct/lb. Brazil will get mostly dry weather, but some showrs are likely on Monday. Temperatures will average near to above normal. Colombia should get scattered showers, and Central America and Mexico should get mostly dry weather, although some showers are expected in Eastern Mexico. Temperatures should average near to above normal.

Chart Trends: Trends in New York are mixed. Support is at 174.00, 172.00, and 169.00 May, and resistance is at 181.00, 184.00 and 189.00 May. Trends in London are mixed. Support is at 2050, 2015, and 1985 May, and resistance is at 2100, 2130, and 2175 May. Trends in Sao Paulo are mixed to up with objectives of 230.00 September. Support is at 216.00, 214.50, and 212.00 September, and resistance is at 231.00, 238.00, and 240.00 September.

Sugar (NYBOT:SBK14)

Futures were lower on forecasts for some beneficial rains to appear in Brazil this week. London was lowr as well, but remains better suppported by higher domestic and export offering prices in India. India remains a wild card for exports due to massive subsidies. It subsidizes producers and now exporters and that makes it very hard for the country to offer exports at reasonable prices while obeying WTO rules. The weather in Brazil remains important, and regular rains are still needed. The rains this week look to be very beneficial. There are worries that El Nino is starting and that it would hurt rains in India, but increase rains in Brazil. Thailand has been selling Sugar with steady or weaker differentials. Demand news remains hard to find. Weather conditions in key production áreas around the world are rated as mostly good except for the dry weather in Brazil.

Overnight News: Brazil could see scattered showers and near to above normal tempertures.

Chart Trends: Trends in New York are up with objectives of 1850 July. Support is at 1800, 1770, and 1730 July, and resistance is at 1840, 1850, and 1860 July. Trends in London are up with objectives of 494.00 August. Support is at 481.00, 478.00, and 472.50 August, and resistance is at 497.00, 500.00, and 504.00 August.

Cocoa (NYBOT:CCK14)

Futures closed lower. Charts show that the market had a reversal type trading day on Friday, implying higher prices are coming, but was unable to penétrate some important resistance areas. The markets gave back a lot of the rally yesterday and prices are now back in the trading range. The idea of ever increasing Asian demand has encountered some resistance as the Chinese economy has shown some weakness. Better tan forecast production in West Afica and Asia has also hurt the bull case. Bears have not been able to break futures from the sideways longer term range, either as overall the market remains tight Mid crop conditions seem good in West Africa and generally good in Southeast Asia. Butter ratios remain strong on ideas of short supplies of Cocoa Butter in Europe and North America, but could weaken in the short term as most holiday demand should be covered. Asian demand has been strong.

Overnight News: Mostly dry weather is expected in West Africa, but a few showers are posible in southern areas. 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 higher today at 4.800 million bags.

Chart Trends: Trends in New York are mixed. Support is at 2935, 2920, and 2900 May, with resistance at 3000, 3010, and 3050 May. Trends in London are mixed. Support is at 1855, 1840, and 1825 May, with resistance at 1890, 1900, and 1920 May.

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