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Softs Report 01/14/19


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COTTON
General Comments: Cotton was near unchanged last week and is consolidating just above major support near 7000 on the weekly charts. Weak overall demand continues to impact the US market. Traders were also looking at the big moves seen in the stock indices and petroleum complex in recent weeks and were wondering what that meant for Cotton prices. There was talk of a recession coming that could hurt demand eventually for Cotton. World production and supplies are going still lower due to bad weather in the growing season for major producers around the world, including India, Pakistan, and Australia. China had problems with its growing weather, too, and has been forced to import a lot of Cotton this year. Demand for US Cotton has been disappointing. China has not bought any US Cotton this year and has been active in other markets, especially India. The US has had disputes this year with other major importers such as Turkey. US prices are down and China might start to look at the US crop, but there have been worries about the quality of the US crop due to some extreme growing conditions in Texas and the Southeast over the Summer and Fall. Ideas are that the quality worries have kept some importers of US Cotton away from the market.
Overnight News: The Delta should get mostly dry weather and above normal temperatures, but more rain appears late this week. The Southeast will get drier weather until rain appears on Saturday. Temperatures should be near to below normal. Texas will have mostly dry weather through Wednesday, than rain or snow. Temperatures will be near to above normal. The USDA average price is now 68.06 ct/lb. ICE said that certified stocks are now 124,235 bales, from 124,587 bales yesterday.
Chart Trends: Trends in Cotton are mixed. Support is at 7200, 7160, and 7060 March, with resistance of 7380, 7420, and 7650 March.

DJ USDA Volume of Cotton Classed Report – Jan 11
Data quoted in bales for week ending Jan 10. Totals may not add due
to rounding. * denotes data withheld to avoid disclosure of individual
producer information. Source: USDA
Weekly Season Weekly Season
Southeast 138,294 3,590,277 Southwest 439,663 5,942,071
NC 8,655 685,007 Okla 42,014 321,104
SC 15,281 321,072 Texas 389,878 5,565,193
Ga 71,824 1,625,610 Kansas 7,771 55,774
Ala 34,666 718,455
Fla 5,033 69,503 Far West 33,705 396,541
Va 2,835 170,630 NM 3,848 28,314
Ariz 23,912 225,945
Delta 65,208 4,428,495 Calif 5,945 142,282
Miss 35,862 1,326,213
Tenn 1,885 760,412 Pima 49,482 522,847
Mo 10,296 750,357 Other 0 0
Ark 12,233 1,181,769 Total US 726,352 14,880,231
La 4,932 409,744 pct tenderable 60.5 66.7

FCOJ
General Comments: FCOJ was lower on Friday, and slightly lower for the week. Trends are turning down on the daily charts and remain down on the weekly charts. The Oranges harvest is active in Florida as the weather is warm and mostly dry. The fruit is abundant, but arrivals to packing houses and processors are reported behind last year. Florida producers are seeing small-sized to good-sized fruit, and work in groves maintenance is active. Irrigation is being used in all areas. Packing houses are open to process fruit for the fresh market, and all processors are open in the state to take packing house eliminations and fresh fruit. Mostly good conditions are reported in Brazil, but the weather there is turning hot and dry again.
Overnight News: Florida should get dry weather. Temperatures will average near to below normal. Brazil should get mostly dry weather and above normal temperatures. ICE said that 1 notice was posted for delivery today and that total deliveries for the month are now 66 contracts.
Chart Trends: Trends in FCOJ are mixed to down with objectives of 120.00 and 116.00 March. Support is at 120.00, 117.00, and 114.00 March, with resistance at 124.00, 126.00, and 128.00 March.

COFFEE
General Comments: Futures were a little higher in New York, but a little lower in London. Speculators were on both sides of the market and cash markets were quiet. The Brazil crops are getting harvested now, and production estimates now range as high as 63.7 million bags. It is a big crop and the main reason to see prices in New York as low as they are right now. Producers are also looking ahead to next year, and production could drop sharply in the off production year. El Nino remains in the forecast and Coffee areas in Brazil could be affected by drought that could hurt production even more. Many areas are dry now, and the forecast calls for more dry weather. This is great for the harvest, but bad for the production prospects for next year. Vietnam is active in its harvest and middlemen were said to be active buyers of the harvest at levels just above the industry. Production in Vietnam is estimated less than 30 million bags due to uneven weather during the growing season. The Coffee Association estimated production at about 25 million bags, but this will be considered a low ball estimate by the trade. The harvest in both countries will wind down over the next few weeks.
Overnight News: Certified stocks are higher today and are about 2.470 million bags. The ICO composite price is now 102.25 ct/lb. Brazil will get mostly dry weather. Temperatures should be near to above normal. Colombia should get isolated showers. Central America and southern Mexico should get showers or dry conditions. Vietnam will get mostly dry weather.
Chart Trends: Trends in New York are mixed to up with objectives of 109.00 and 115.00 March. Support is at 102.00, 99.00, and 96.00 March, and resistance is at 106.00, 107.00 and 110.00 March. Trends in London are mixed. Support is at 1500, 1480, and 1470 March, and resistance is at 1560, 1610, and 1630 March.

DJ ICE Commitments: ICE Europe Robusta Coffee Futures/Options
Commitments of Traders-Options and Futures
Combined Positions as of 01/08/2019
Reportable Positions
===============================================================================
Producer/Merchant/
Processor/User Swap Dealers
OI Long Short Long Short Spreading
===============================================================================
ICE Robusta Coffee Futures and Options – ICE Futures Europe
130,776 74,681 61,520 11,855 3,796 2,372
Percent of Open Interest Represented by Each Category of Trader
100.0% 57.1% 47.0% 9.1% 2.9% 1.8%
Number of Traders in Each Category
147 52 45 15 5 10
Reportable Positions
===============================================================================
Managed Money Other Reportables
Long Short Spreading Long Short Spreading
===============================================================================
9,175 32,826 9,793 2,037 1,201 15,171
Percent of Open Interest Represented by Each Category of Trader
7.0% 25.1% 7.5% 1.6% 0.9% 11.6%
Number of Traders in Each Category
15 31 15 11 5 16
Nonreportable Positions
=======================
Long Short
=======================
5,691 4,096
Percent of Open Interest Represented by Each Category of Trader
4.4% 3.1%

SUGAR
General Comments: Both markets moved higher early in the week, then held. The weekly charts in both markets show that trends could be turning sideways or up. Petroleum futures appear to have made some short-term lows at this time, so that might be helping change the tone in Sugar. Brazil has been using a majority of its Sugarcane harvest to produce ethanol this year instead of Sugar, and there is some talk the mills might switch back to Sugar unless petroleum prices improve soon. There are doubts on just how much production will be seen this year in India. Northwest India had been experiencing hot and dry weather that could cut yields. It has not announced a reduction in its export goal of 5.0 million tons this year, but it appears that the country will not export nearly that much. Some industry sources told wire services that exports could be only half of the target. The government is now exploring ethanol use for the surplus. Dry conditions continue in northern Brazil and there are frequent rains in Rio Grande do Sul. Very good conditions are reported in Thailand, but the next production could be less as farmers might switch to other crops due to low prices for Sugarcane.
Overnight News: Brazil will mostly dry weather in the north and showers in the south. Temperatures should be near to below normal.
Chart Trends: Trends in New York are mixed. Support is at 1250, 1220, and 1190 March, and resistance is at 1290, 1300, and 1320 March. Trends in London are mixed. Support is at 343.00, 340.00, and 339.00 March, and resistance is at 350.00, 351.00, and 354.00 March.

DJ ICE Commitments: ICE Europe White Sugar Futures/Options
Commitments of Traders-Options and Futures
Combined Positions as of 01/08/2019
Reportable Positions
===============================================================================
Producer/Merchant/
Processor/User Swap Dealers
OI Long Short Long Short Spreading
===============================================================================
ICE White Sugar Futures and Options- ICE Futures Europe
93,510 48,191 65,794 12,253 892 1,156
Percent of Open Interest Represented by Each Category of Trader
100.0% 51.5% 70.4% 13.1% 1.0% 1.2%
Number of Traders in Each Category
134 52 53 11 2 6
Reportable Positions
===============================================================================
Managed Money Other Reportables
Long Short Spreading Long Short Spreading
===============================================================================
14,582 12,304 6,925 2,901 169 3,176
Percent of Open Interest Represented by Each Category of Trader
15.6% 13.2% 7.4% 3.1% 0.2% 3.4%
Number of Traders in Each Category
24 18 15 7 2 10
Nonreportable Positions
=======================
Long Short
=======================
4,326 3,094
Percent of Open Interest Represented by Each Category of Trader
4.6% 3.3%

COCOA
General Comments: Futures closed a little lower for the week in New York and lower in London as the new main crop harvest comes to market in West Africa. Trends are still up in both markets, and the weekly charts show that a significant up side move is possible. However, futures were unable to extend the up move last week, so a correction lower might be seen this week. The outlook for strong production in the coming year is still around, and ports are said to have plenty of Cocoa on offer. The main crop harvest is active in West Africa. Main crop production ideas for Ivory Coast and Ghana are being reduced, with Ivory Coast now estimating its main crop production at 1.985 million tons, down from previous estimates just over 2.0 million tons. The crop production estimates might become smaller due to Harmattan winds and hot and dry conditions that have moved into West Africa. These conditions can take moisture out of the soil very rapidly and cause some very significant stress on the trees. Conditions appear good in East Africa and Asia. Demand is said to be improving as offers from the new harvest start to increase.
Overnight News: Mostly dry conditions are expected in West Africa. Temperatures will average above normal. Malaysia and Indonesia should see showers. Temperatures should average above normal. Brazil will get mostly dry conditions and near to above normal temperatures. ICE certified stocks are lower today at 3.452 million bags.
Chart Trends: Trends in New York are mixed. Support is at 2350, 2320, and 2290 March, with resistance at 2400, 2440, and 2480 March. Trends in London are mixed to down with objectives of 1690 and 1500 March. Support is at 1690, 1660, and 1590 March, with resistance at 1730, 1750, and 1770 March.

DJ ICE Commitments: ICE Europe Cocoa Futures/Options
Commitments of Traders-Options and Futures
Combined Positions as of 01/08/2019
Reportable Positions
===============================================================================
Producer/Merchant/
Processor/User Swap Dealers
OI Long Short Long Short Spreading
===============================================================================
ICE Cocoa Futures and Options – ICE Futures Europe
304,480 172,780 205,132 28,019 10,887 20,239
Percent of Open Interest Represented by Each Category of Trader
100.0% 56.7% 67.4% 9.2% 3.6% 6.6%
Number of Traders in Each Category
158 53 45 17 9 15
Reportable Positions
===============================================================================
Managed Money Other Reportables
Long Short Spreading Long Short Spreading
===============================================================================
28,646 17,642 19,114 4,620 46 28,718
Percent of Open Interest Represented by Each Category of Trader
9.4% 5.8% 6.3% 1.5% 0.0% 9.4%
Number of Traders in Each Category
27 17 15 16 3 22
Nonreportable Positions
=======================
Long Short
=======================
2,344 2,701
Percent of Open Interest Represented by Each Category of Trader
0.8% 0.9%



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About the author


Jack Scoville is a futures market analyst specializing in grains, softs, rice, oilseeds, and tropical products such as coffee and sugar.

He offers brokerage services to an international clientele of agricultural producers, processors, exporters, and other professional traders.

Jack writes daily comments of the many products he specializes in, in three languages, English, Spanish, and Portuguese.

He has been quoted by most major wire services including Dow Jones, AP, and Reuters. His comments have also appeared in newspapers around the world and on various radio and television shows.

Jack offers a dedicated and high quality service for his clients. His industry contacts in South America, Europe, Asia, and North America provide him with a unique view of the markets. He also uses his own charting program for technical traders.

Jack began working in the futures industry over 30 years ago and spent 10 years working on the floor of the Chicago Board of Trade in various roles. He has been a broker off the floor since then and has been with The PRICE Futures Group since it was established in 1988.

Contact Jack Scoville: (800) 769-7021 or at jscoville@pricegroup.com

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