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Morning Softs. 08/17/17


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COTTON
General Comments: Cotton was a little lower on good weather forecasts for the crop and the higher US Dollar. Current forecasts call for some rains in Texas to boost crop prospects there. The temperatures are more moderate in Texas and there have been some showers. The growing weather in the US Delta and Southeast is generally good as rains have been seen in many growing areas. Bolls are forming and starting to open in many areas. Some harvest has been reported in southern Texas and results have been very good. Monsoon rains are reported as very uneven in India and Pakistan and some flooding has been reported in the Gujarat of India. Some central areas and eastern areas have missed rains. Some crops are lost due to the flooding. It has been too hot and dry in Turkey and production losses are possible.
Overnight News: The Delta and Southeast will see mostly dry conditions. Temperatures should average near to below normal. Texas will see dry scattered showers through the weekend. Temperatures will average near normal. The USDA average price is now 65.43 ct/lb. ICE certified stocks are now 16,842 bales, from 17,315 bales yesterday. USDA said that net Upland Cotton export sales were 186,700 bales this year and 66,000 bales next year. Net Pima sales were 3,700 bales this year and 1,100 bales next year.
Chart Trends: Trends in Cotton are down with no objectives. Support is at 6630, 6610, and 6540 December, with resistance of 6750, 6780, and 6850 December.

FCOJ
General Comments: FCOJ closed higher once again as some tropical systems appear to be forming in the Atlantic. The potential for storms increases dramatically for the next few weeks. Florida weather is very good as it is now drier after some recent rains. There are no systems in the Atlantic to cause concern about tropical storm development that could be detrimental to trees and fruit. One System is moving away from the US in the Atlantic and into Mexico and one might fall apart before getting close to the US. The third System could develop and could move to Florida. The demand side remains weak and there are plenty of supplies in the US. Trees now are showing fruit of varying sizes and overall conditions are called good. Brazil crops remain in mostly good condition.
Overnight News: Florida should get mostly dry conditions or light showers and near to above normal temperatures this week and good chances for showers and storms this weekend. Brazil should get mostly dry conditions and near to below normal temperatures.
Chart Trends: Trends in FCOJ are mixed to up with objectives of 153.00 September. Support is at 137.00, 135.00, and 133.00 September, with resistance at 142.00, 145.00, and 148.00 September.

DJ Florida Citrus Growers Get Help Bayer To Fight Disease In Citrus — WSJ
By Arian Campo-Flores
This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 17, 2017).
Florida’s battered citrus industry is gaining a new partner in its decade long fight against a disease ravaging the state’s groves: the German pharmaceutical and chemical giant Bayer AG.
The company announced on Wednesday a three-year research agreement with the Citrus Research and Development Foundation, a nonprofit created by the Florida citrus industry. The partnership aims to develop new ways to combat citrus greening, an incurable bacterial disease that depleted trees and can cause fruit to drop to the ground prematurely.
The foundation assembled $12 million in funding from citrus growers and companies including Coca-Cola Co. and PepsiCo Inc., which are big buyers of Florida citrus for their juice brands. Bayer will dedicate 12 researchers to the effort, a library of more than 1 million chemicals and formidable lab resources. If it finds potential treatments, the company will further develop and commercialize them.
“Without advanced tools to control citrus greening, the citrus industry in Florida could be out of business within 10 to 15 years,” said Adrian Percy, head of research and development at the crop-science division of Bayer.
Florida growers are projected to produce 68.7 million boxes of oranges in the year ending Sept. 30, down 53% from the 146.7 million boxes five years earlier, according to the U.S. Department of Agriculture’s July forecast. Land devoted to citrus in the state declined 19% to 437,000 acres in the past nine years, according to the Florida Citrus Mutual, a marketing cooperative.
Tom Jerkins, president of Premier Citrus, which has more than 20,000 acres of citrus groves in Florida, said he is hopeful about the research pact. His company has lost 30% to 40% of its citrus acreage and faced a 30% to 50% increase in costs in the past decade as a result of greening, he said.
“What this agreement allows us to do is engage the powerful industrial, analytical assay skill” of Bayer, Mr. Jerkins said. “This is a very big deal for us.”
The citrus industry accounts for 45,000 jobs in Florida and economic activity of $8.6 billion, according to the Florida Citrus Mutual. The state provides most of the oranges used for juice in the U.S.
“With this increased focus on research, we are ensuring the quality and consistency of our fruit supply,” said a representative for Coke, whose brands include Minute Maid and Simply Orange and which contributed $500,000 to the Bayer collaboration.
“The greening issue is a serious global threat, and we want to ensure the survival and competitiveness of Florida’s citrus growers,” said a representative for Pepsi, which owns the Tropicana brand.
Greening, also known as Huanglongbing, has been a maddening foe for the citrus industry. The bacterium is transmitted by an insect, the Asian citrus psyllid, which injects it into the tree’s vascular system. The disease hinders the flow of nutrition in the tree and slowly starves it.
Growers have explored a range of methods to fight greening. Some have employed intensive spraying to try to reduce the psyllid population, without much success. Researchers are investigating so-called RNA interference, a biological process that could disrupt the psyllids’ genes and affect their reproduction. Another program involved unleashing an Asian wasp that attacks the psyllid.
Other efforts focus on battling the bacterium. For the past two years, growers have been able to use three approved bactericides to reduce the level of bacteria in trees, said Harold Browning, chief operating officer at the Citrus Research and Development Foundation. Researchers also are studying different varieties of citrus trees to determine which might be more-tolerant of greening. But deriving a truly resistant plant is at least five to 10 years away, Mr. Browning said.
Bayer’s work will focus on testing thousands of biological agents and chemical compounds to identify those that might either attack greening bacteria or bolster trees’ defenses, Mr. Percy said. The lab work will be conducted in Bayer facilities in West Sacramento, Calif., and either France or Germany. The aim, he said, is to have candidates ready to test in groves within two to three years.

COFFEE
General Comments: New York and London closed lower for one more day on follow through selling tied to the higher US Dollar and ideas of improving growing conditions in Brazil. There has been some rains and flowering has been reported to get the next production cycle started. Ideas of smaller offers from Brazil and the rest of Latin America are still around, but ideas of weaker demand and the potential for increased production next year keep buyers away. Producers are still worried about an extended outbreak of dry weather as flowering has started in Brazil. Reports of Broca worm moving into Brazil crops is bringing ideas of additional losses. The harvest in Brazil is starting to wind down. Reports indicate that the quality of the beans harvested in Brazil is not good and that many beans are small. The cash market is quiet with little interest from producers or roasters. New York is in a correction mode for now, but must hold near 135.00 September or so and then turn back higher to keep the longer term trends intact.
Overnight News: Certified stocks are higher today and are about 1.599 million bags. The ICO composite price is now 126.35 ct/lb. Brazil will get mostly dry weather, but some showers are possible in southern areas. Temperatures should average near to above normal. Colombia should get scattered to isolated showers. Central America and southern Mexico should get scattered showers. Temperatures should average near to above normal.
Chart Trends: Trends in New York are down with objectives of 126.00 and 115.00 September. Support is at 129.00, 128.00, and 125.00 September, and resistance is at 135.00, 137.00 and 139.00 September. Trends in London are down with objectives of 1990 and 1880 September. Support is at 2020, 1990, and 1960 September, and resistance is at 2100, 2130, and 2150 September.

DJ ICO Price Metric Slipped in July, Yield Forecast Up — Market Talk
1201 GMT – The International Coffee Organization’s composite indicator price rose in July, thanks to reports of lower yields in Brazil and rumors about quality problems in 2017/18. The ICO’s indicator rose by 4% month-on-month in July, to 127.26 U.S. cents a pound, up from 122.39 U.S. cents in June. Most of that rise came in the second half of the month. The ICO also raised its coffee production forecast for 2016/17 to 153.9 million bags, up from the previous forecast of 151.6 million bags. Indonesia and Peru are among the contributors to this higher number, ICO says. London-traded robusta was last down 0.11% at $2,054.00 a ton, and arabica was down 0.04% at $1.34 a pound. (david.hodari@wsj.com; @davidhodari)

SUGAR
General Comments: Futures in London and New York were lower on ideas that world production is more than enough for any demand right now. A higher US Dollar against world currencies was also noted as a reason to sell. The charts show that trends are turning down again in the short-term. The big harvest in Brazil continues, but some of the processing will probably switch now to ethanol due to tax changes last week and relative US Dollar weakness. In fact, sources in Brazil expect the percentage of cane crushed for ethanol to change in the short-term. Production potential in Thailand seems improved for now as monsoon rains have been better than last year. It is raining in much of India now as the monsoon is active, but rains have been uneven. Some northwest areas have been flooded due to big rains. Other areas are too dry and there could be some damage to crops if more rains do not show up fairly soon. Thailand is getting rains. The rest of Southeast Asia is seeing average to above average rains so far this year.
Overnight News:
Chart Trends: Trends in New York are mixed to down with no objectives. Support is at 1240, 1210, and 1180 October, and resistance is at 1360, 1370, and 1390 October. Trends in London are down with objective of 344.00 and 335.00 October. Support is at 360.00, 357.00, and 354.00 October, and resistance is at 375.00, 378.00, and 381.00 October.

COCOA
General Comments: Futures closed lower on follow through selling from speculators that was tied to the higher US Dollar and ideas of good growing conditions in West Africa. The market is holding in a big trading range and is now at the lower end of the range. Overall, the market is between harvests and no one seems to expect much to happen for another few weeks It is warmer and drier in Ivory Coast, but rains are in the forecast. The rest of West Africa is still getting showers and moderate temperatures. Chocolate manufacturers in general have reported improved sales volumes and ideas are that the better sales can continue as chocolate and cocoa are relatively cheap. Ivory Coast is expected to have a big crop starting harvest this Fall, but it should be smaller than last year. Ghana also expects a good crop this year. The growing conditions in other parts of the world are generally good. East African conditions are now called good. Good conditions are still seen in Southeast Asia.
Overnight News: Scattered showers and storms are expected in West Africa. Temperatures will average near to above normal. Malaysia and Indonesia should see scattered showers in all areas. Temperatures should average near to above normal. Brazil will get mostly dry conditions or light showers and near to above normal temperatures. ICE certified stocks are lower today at 5.165 million bags.
Chart Trends: Trends in New York are down with objectives of 1830 September. Support is at 1830, 1790, and 1780 September, with resistance at 1900, 1940, and 1980 September. Trends in London are down with objectives of 1420 September. Support is at 1430, 1400, and 1370 September, with resistance at 1500, 1540, and 1570 September.
Questions? Ask Jack Scoville today at 312-264-4322

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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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