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Morning Softs. 08/23/17


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COTTON
General Comments: Cotton was a little higher for one more day in consolidation trading. The market is trying to decide if lower prices are needed now or if a rally is possible. It might take some selling from producers to push futures significantly lower at this time, and for now they are quiet. Prices remain under general pressure due to good weather forecasts for the crop and the higher US Dollar. 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. Some crops are lost due to the flooding, other areas have been too dry. Better rains are forecast for drier areas this week. The weekly charts show that futures might have completed a bear flag and could break some support areas and move lower in the next few weeks.
Overnight News: The Delta and Southeast will see showers through Thursday, then mostly dry conditions on Friday and Saturday, then showers and storms starting on Sunday. Temperatures should average near to below normal. Texas will see scattered showers on Thursday and Friday, then mostly dry conditions. Temperatures will average near normal. The USDA average price is now 66.81 ct/lb. ICE certified stocks are now 13,503 bales, from 13,520 bales yesterday.
Chart Trends: Trends in Cotton are mixed to down with no objectives. Support is at 6710, 6670, and 6630 December, with resistance of 6850, 6900, and 6920 December.

FCOJ
General Comments: FCOJ closed lower again yesterday and trends are trying to turn down on the charts. There has been bearish news for the market this week. Elizabeth Steger estimated Florida production for the coming year at 75.5 million boxes, up significantly from the 68 million boxes harvested this year. Nielsen said that demand remains soft. Sales were down 8.9% from the previous year in the latest four weeks and are now down 7.5% for the marketing year. Florida weather is very good as it is now drier, but showers are still around and some big rains could be coming. There are no systems in the Atlantic to cause concern about tropical storm development that could be detrimental to trees and fruit. The demand side remains weak and there are plenty of supplies in the US. Trees now are showing fruit of good sizes and overall conditions are called good. Brazil crops remain in mostly good condition and production estimates are climbing after recent rains.
Overnight News: Florida should get scattered 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 above normal temperatures. USDA said that FCOJ in Cold Storage is now 508.715 million pounds, from 544.443 million last month and 710.973 million last year.
Chart Trends: Trends in FCOJ are mixed. Support is at 131.00, 129.00, and 128.00 September, with resistance at 138.00, 140.00, and 142.00 September.

COFFEE
General Comments: New York closed lower as the First Notice Day for September Contracts is at hand. London closed higher and continues to be the strength of the market. The cash market remains very quiet, and al eyes remain on 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 go against ideas of weaker demand and the potential for increased production next year. Producers are still worried about an extended outbreak of dry weather as flowering has started in Brazil, but most are not concerned as there is often dry weather at this time of year. The harvest in Brazil is starting to wind down and harvest reports have been mixed. Reports indicate that the quality of the beans harvested in Brazil often is not good and that many beans are small. Even so, many people talk of production above 50 million bags.
Overnight News: Certified stocks are higher today and are about 1.639 million bags. The ICO composite price is now 124.35 ct/lb. Brazil will get mostly dry weather. 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. ICE said that 44 notices were posted against September Contracts today and that total deliveries for the month are now 44 contracts
Chart Trends: Trends in New York are down with objectives of 126.00 December. Support is at 127.00, 126.00, and 119.00 December, and resistance is at 133.00, 135.00 and 137.00 December. Trends in London are mixed. Support is at 2100, 2080, and 2060 November, and resistance is at 2140, 2150, and 2170 November.

SUGAR
General Comments: Futures were a little higher in London and mixed New York in consolidation trading. It looked like the London market has found some Support, but it has been the weaker market for the last few weeks. Both markets failed to overcome nearby resistance, but both remain poised to try to move higher in the short-term. Most view the rally as just a short-term correction of the recent down trend. Prices have fallen a lot already due to ideas of increased production in the coming year, so some type of correction trading is possible. The big harvest in Brazil continues, and ideas of big offers from there has been a reason for prices to stay pinned near 1300 New York October. An increasing part of the Sugarcane production will likely shift to ethanol due to recent tax changes there. Production potential in Thailand seems strong as monsoon rains have been better than last year. It is raining in much of India now as the monsoon is active, and reports indicate good rains in many areas this week. Thailand is getting rains and production ideas are high. 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. Support is at 1310, 1290, and 1240 October, and resistance is at 1360, 1370, and 1390 October. Trends in London are mixed to down with objectives of 344.00 and 335.00 October. Support is at 368.00, 360.00, and 357.00 October, and resistance is at 375.00, 378.00, and 381.00 October.

DJ Green Pool Boosts 2017-18 Sugar Forecast by 28%
By David Hodari
Commodities consultancy Green Pool increased its estimate for global sugar production in 2017-18 by 28% to a 7.14 million metric ton surplus compared with its previous forecast in early May.
The forecast outstrips the International Sugar Organization’s most recent estimate of 4 million tons, Rabobank’s 2.7 million ton estimate, and F.O. Licht’s forecast of 5.4 million tons.
Green Pool’s upgrade to its forecast was primarily driven by a 6% increase to production estimates, which outstripped a 1.5% increase in its consumption forecast.
High prices in 2016 and weather provide a large boost to production, Green Pool said. Meanwhile the consultancy expects global consumption to be beset by those same high prices from 2016, high tariffs, higher taxes, and rising health concerns.
In the forecast update, Green Pool maintained its optimism that Brazil would see strong sugar production, despite recent tax changes that make it more profitable for crusher to produce ethanol. “It would take a much steeper fall in sugar prices to change that outlook,” Green Pool said. Elsewhere, the consultancy raised its crop production estimates for Thailand for both this season and next, citing a beneficial monsoon after two years of El Nino-induced drought.
Green Pool left its Chinese production forecast unchanged. This came on the same day as new Chinese import figures showed a drop of 85% year-over-year of the quantities of sugar entering the country. That makes July’s import figure of 59,533 tons the lowest since June 2013, according to ING in a morning note.
The consultancy also adjusted its 2016-17 deficit figure to 2.08 million tons from the late June estimate of 2.04 million tons–a 2% change–thanks to a later-than-usual Pakistani crop.
Raw sugar prices were last 1.1% higher at 13.66 U.S. cents.

COCOA
General Comments: Futures closed a little lower in quiet trading. It was a quiet session with little in the way of fresh information to push prices in one direction or the other. The market is holding in a big trading range and is now at the lower end of the range. 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. Ivory Coast has sold a lot of the next crop already, but has now pulled offers as prices are cheap and as they want to see how much more will be available for export. 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 higher today at 5.126 million bags. ICE said that 23 notices were posted against September contracts today and that total deliveries for the month are now 600 contracts.
Chart Trends: Trends in New York are mixed. Support is at 1850, 1830, and 1810 December, with resistance at 1920, 1950, and 2010 December. Trends in London are mixed to down with objectives of 1420 December. Support is at 1460, 1450, and 1430 December, with resistance at 1520, 1550, and 1590 December.
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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