Morning Softs 3/5/13

COTTON
General Comments: Futures were higher again yesterday on talk of strong export demand. No new deals were confirmed, but talk indicates that the buying was active over the weekend. Ideas of less planted area also supported Cotton futures again, but most of the talk was of the new demand. The current low new crop prices are bringing into question what farmers in Texas and the Delta and Southeast will plant this year. Some are wondering if planted area might be lower this year here in the US due to weak prices against competing crops. The area lost would go mostly to Corn and Soybeans. The plantings intentions report will be released at the end of the month. Texas areas should turn drier for the rest of the week. Delta and Southeast areas will see mostly dry weather.
Overnight News: The Delta and Southeast will see dry conditions. Temperatures will average mostly below normal. Texas will get dry weather. Temperatures will average below normal, but above normal starting Thursday. The USDA spot price is now 80.36 ct/lb. ICE said that certified Cotton stocks are now 0.421 million bales, from 0.405 million yesterday. ICE said that 6 contracts were delivered yesterday and that total deliveries for the month are 1,481 contracts.
Chart Trends: Trends in Cotton are up with objectives of 89.00 May. Support is at 85.20, 84.00, and 83.80 May, with resistance of 87.50, 88.90, and 89.20 May.

DJ China Zhengzhou Cotton Futures Closing Prices, Volume
Tuesday, March 5 2013
Product Settle PrevSettle Change Open High Low Volume Open Int
CF303 19,455 19,335 120 19,400 19,520 19,400 82 620
CF305 20,295 20,095 200 20,195 20,420 20,160 12,592 26,698
CF307 20,240 20,035 205 20,205 20,370 20,105 40 228
CF309 20,245 20,010 235 20,140 20,420 20,060 330,612 148,748
CF311 20,245 20,175 70 20,230 20,300 20,145 494 1,336
CF401 20,170 20,095 75 20,130 20,280 20,065 10,898 20,344
Notes:
1) Unit is Chinese yuan a metric ton;
2) Change is the day’s settlement minus previous settlement;
3) Volume and open interest are in lots;
4) One lot is equivalent to 5 metric tons.

FCOJ
General Comments: Futures closed higher on speculative buying. Short term trends turned down with the price action on Friday, but prices were able to climb back to the trading range yesterday. It was a cold weekend in Florida, and frosts were possible over the weekend. Some areas could have seen a freeze. Temperatures had been warm in the state until the weekend, and conditions are dry, and talk about the potential for more fruit drop and poor development of the crop for next year returned. Crop development is reported to be far enough along that some damage or loss is possible. Some buds could have been lost and that will mean less production potential for next year if the loss is confirmed. Harvest in Florida of mid and early oranges is almost over, and the Valencia harvest is underway. Bloom has been reported in groves in all production areas of the state. Brazil is seeing near to above normal temperatures and light showers and could use more rain. ICE said that 0 notices were posted against March contracts and that total deliveries for the month are 0 contracts.
Overnight News: Florida weather forecasts call for mostly dry conditions. Temperatures will average below normal.
Chart Trends: Trends in FCOJ are mixed to down with objectives of 117.00 and 109.00 May. Support is at 120.00, 118.00, and 115.00 May, with resistance at 125.00, 129.00, and 132.00 May.

COFFEE
General Comments: Futures were higher yesterday and short term trends turned up on the charts. Speculators bought and some stop loss orders were hit on the way up. It still seems that New York is trying to form a low in this area, and it might have completed a low yesterday. Some support came from news that Colombia Coffee farmers will not deliver as they seek higher prices for crops and some support came from even more reports of severe rust damage in Central America. Reports of rust in Central America and the production cuts that it is causing are getting noticed, as is news that the rust is now reported in Peru. Central America could lose at least 20% of the total crop this year. Losses next year could be 30% or more of the crop. Current crop development is still good this year in Brazil, and production areas are getting drier weather for the developing crop. There is some talk the drier weather could stress trees. Production ideas remain big there. Vietnam producers there talk about the potential for 25% crop losses due to prolonged drought in the Central Highlands. Central America crops are mostly harvested. Colombia is reported to have good conditions. Colombian truckers ended their strike today as their demands were negotiated by the government.
Overnight News: Certified stocks are higher today and are about 2.696 million bags. The ICO composite price is now 135.30 ct/lb. Brazil should get mostly dry weather. Temperatures will average near to above normal. Colombia should get scattered showers, and Central America and Mexico should get mostly dry conditions. Temperatures should average near to above normal. ICE said that 0 contracts was delivered today against March futures and that total deliveries for the month are 102 contracts.
Chart Trends: Trends in New York are mixed to up with objectives of 147.00, 152.00, and 160.00 May. Support is at 142.50, 141.00, and 137.00 May, and resistance is at 147.00, 149.00, and 153.00 May. Trends in London are mixed to up with objectives of 2145 May. Support is at 2090, 2070, and 2040 May, and resistance is at 2130, 2140, and 2170 May. Trends in Sao Paulo are mixed to up with objectives of 187.00 and 193.00 September. Support is at 181.00, 180.00, and 177.00 September, and resistance is at 185.00, 187.00, and 189.00 September.

SUGAR
General Comments: Futures closed higher in New York, and in London. Once again, New York futures could not move decisively below 1800. It seems that demand for White Sugar is good right now and that has supported London for now, but the overall supply of Sugar is big so the support has been limited. Chart trends in London and New York are now mixed. Big supplies of Sugarcane and Raw Sugar keep price trends in check, and the market remains in a sideways trend even though trends are trying to turn up. Brazil said it will increase the ethanol in its gasoline blends in May, and this could help work off a lot of the surplus production in Brazil and could tighten world balance sheets. Production has been strong in Brazil so far this year, and reports say that the new crop production looks to be strong as well, so the diversion into more domestic ethanol use will help. Exports from Brazil continue to be very strong. Chart patterns now show that a rally is possible, with London likely to be the leader in any rally attempt.
Overnight News: Mostly dry weather expected in Brazil. Temperatures should be near to above normal.
Chart Trends: Trends in New York are mixed. Support is at 1790, 1770, and 1740 May, and resistance is at 1860, 1875, and 1900 May. Trends in London are mixed. Support is at 513.00, 512.00, and 506.00 May, and resistance is at 520.00, 523.00, and 527.00 May.

COCOA
General Comments: Futures closed lower again yesterday on follow through selling and on ideas of big supplies available to the market. Market trends are still down overall, but futures are within about 100 dollars of a potential swing low based on the charts. Ideas are that current low prices should créate new demand and that the main crop harvest is over in Western Africa and much of Asia so that supplies on offer could also be less. The weather is forecast to be warm and dry in West Africa this week. For now, traders expect good mid crop production from West Africa, but thios could change if hot wquinds develop in the short term. Malaysia and Indonesia crops appear to be in good condition and weather is called favorable. Traders are starting to look ahead and past the midcrop harvest and note that the market could move to a production déficit next year. More buying is being noted in deferred months at this time due to smaller production ideas for the coming crops.
Overnight News: Mostly dry conditions are expected in West Africa. Temperatures will average above normal. Malaysia and Indonesia should see episodes of scattered showers, but Malaysia will be drier this weekend. Temperatures should average near normal. Brazil will get scattered showers and warm temperatures. ICE said that 0 contracts were delivered today against March contracts and that total deliveries for the month are now 826 contracts. ICE certified stocks are lower today at 4.392 million bags.
Chart Trends: Trends in New York are down with objectives of 2050, 2020, and 1990 May. Support is at 2050, 2020, and 2000 May, with resistance at 2100, 2110, and 2130 May. Trends in London are down with objectives of 1390 and 1365 May. Support is at 1360, 1330, and 1300 May, with resistance at 1405, 1435, and 1450 May.

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