Thursday, July 18, 2013

Cotton falls as rain reported in key producing areas

By Jack Scoville

COTTON (NYBOT:CTV13)

General Comments: Futures moved lower on reports of rain in Texas. Temperatures are much cooler in Texas and rain was reported in central and western parts of the state, including key cotton producing areas. The rains there are called very beneficial. Some showers are possible in the next couple of days. Conditions in Alabama, Mississippi, and Missouri are below average now, but will see warm temperatures and some showers this week, with most of the precipitation in eastern and southern areas. Some rain and cooler temperatures are possible this weekend. It is possible that futures can continue to work lower as demand has turned soft and as the weather is getting better in almost all US production areas. Weather for Cotton appears good in India, Pakistan, and China.

Overnight News: The Delta and Southeast will see showers and storms develop this weekend. Temperatures will average near to above normal. Texas will see drier weather this week and this weekend. Temperatures will average near to above normal. The USDA spot price is now 79.80 ct/lb. ICE said that certified Cotton stocks are now 0.518 million bales, from 0.540 million yesterday. USDA said that net Upland Cotton export sales were 50,400 bales this year and 40,100 bales next year. Net Pima sales were 4,800 bales this year and 5,300 bales next year.

Chart Trends: Trends in Cotton are down with objectives of 83.00 October. Support is at 84.00, 83.10, and 82.80 October, with resistance of 85.50, 86.00, and 86.50 October.

FCOJ (NYBOT:OJU13)

General Comments: Futures closed higher and made new highs for the move. Some more buying is possible this week. There is not much new surrounding the FCOJ market these days, and the tropics remain quiet for now. Growing conditions in the state of Florida remain mostly good. Showers and storms are reported and conditions are said to have improved in almost the entire state. Ideas are that the better precipitation will help trees fight the greening disease. Temperatures are warm in the state, but the precipitation is the key right now. The tropics appear quiet and there are no storms in view. Brazil is seeing near to above normal temperatures and mostly dry weather, and there are reports of stress to trees and the potential for lower production. It could turn cold in some production areas early next week.

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

Chart Trends: Trends in FCOJ are up with objectives of 145.00 and 155.00 September. Support is at 140.00, 136.50, and 134.00 September, with resistance at 145.00, 147.00, and 149.00 September.

COFFEE (NYBOT:KCU13)

General Comments: Futures were higher in New York on speculative buying tied to some forecasts for colder and wetter conditions for Brazil Coffee areas starting this weekend. No forecast is calling for damaging temperatures, but the market is short. In addition, the rain could disturb the last of the harvest and it could get cold enough to freeze in Parana, which is nota ll that far away from Coffee producing areas. Chart trends are up in all three markets. London moved higher on some buying tied to fewer offers from Vietnam on ideas that producers there are about sold out. Exports in June as reported by the customs bureau there were less than expectations. Offers of Arabica from origin are still hard to find and feature strong differentials. Demand is improving as roasters sense the change in market direction. Brazil weather is forecast to show dry conditions, but no cold weather for the rest of the week. It could turn wetter and colder this weekend. Current crop development is still good this year. Central America crops are seeing moderate to light rains. Colombia is still reported to have good conditions.

Overnight News: Certified stocks are marginally lower today and are about 2.748 million bags. The ICO composite price is now 123.00 ct/lb. Brazil should get dry weather except for some showers in the south. Temperatures will average near to above normal, but below normal next week with frosts and perhaps a freeze possible in southern areas. 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 up with objectives of 132.00 and 140.00 September. Support is at 125.00, 124.00, and 120.00 September, and resistance is at 129.00, 132.00, and 135.00 September. Trends in London are up with objectives of 1980 September. Support is at 1900, 1850, and 1820 September, and resistance is at 1980, 1995, and 2010 September. Trends in Sao Paulo are up with objectives of 156.00 and 164.00 September. Support is at 146.00, 143.00, and 140.00 September, and resistance is at 151.00, 155.00, and 159.00 September.

SUGAR (NYBOT:SBV13)

General Comments: Futures closed mixed in consolidation trading. There is not much new to talk about here so far this week. Futures trends remain down overall and price action has been weak as most expect a big production surplus for the year. Many expect production to be higher overall in Brazil due to a record Sugarcane production, and countries like Thailand and India also expect more production this year. The Indian monsoon is good so far this season and this should help with Sugarcane production in the country. Northern areas are in good shape, but southern areas might be too hot and dry and some stress to the Sugarcane is likely. Less production of Sugar beets is reported from Russia and Ukraine as farmers there elected to plant more grains.

Overnight News: Brazil should be mostly dry and warm this week, but could see colder and wetter weather this weekend.

Chart Trends: Trends in New York are mixed to down with objectives of 1580 October. Support is at 1570, 1540, and 1510 October, and resistance is at 1620, 1630, and 1650 October. Trends in London are down with objectives of 448.00 October. Support is at 457.00, 454.00, and 451.00 October, and resistance is at 465.00, 466.00, and 470.00 October.

COCOA  (NYBOT:CCU13)

General Comments: Futures closed higher on speculative buying tied to ideas that the North American grind data could be very strong. The US data should be out today. Ghana and Nigeria would appear to have the most problems with the rains, and it remains a little too dry in many parts of Ivory Coast. The weather is better in West Africa, with more moderate temperatures and some rains. A few showers are appearing again in Ivory Coast this week, but Ivory Coast will still need more rain. Other West African countries are reported to have good conditions. Malaysia and Indonesia crops appear to be in good condition and weather is called favorable.

Overnight News: Scattered showers are expected in West Africa. Temperatures will average near to above normal. Malaysia and Indonesia should see episodes of isolated showers. Temperatures should average near normal. Brazil will get mostly dry conditions and warm temperatures. ICE certified stocks are slightly lower today at 4.803 million bags.

Chart Trends: Trends in New York are up with no objectives. Support is at 2250, 2240, and 2210 September, with resistance at 2330, 2350, and 2380 September. Trends in London are up with objectives of 1640 September. Support is at 1560, 1550, and 1530 September, with resistance at 1610, 1640, and 1660 September.

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