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Morning Softs 08/24/17


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COTTON
General Comments: Cotton was higher on what appeared to be speculative short covering tied to forecasts for big rains to move into Texas and potentially hurt the quality and harvest progress in some areas of the state. Big rains could move into the Delta late this weekend and into next week as well. Trends turned up for the short term with the price action yesterday. The market is trying to decide if lower prices are needed now or if a rally is possible. Prices have been 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. However, bit rains could move into southern areas in the next few days from a tropical System now in the Gulf. The growing weather in the US Delta and Southeast is generally good as rains have been seen in many growing areas. Big rains from a tropical System could start to appear on Sunday. 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 and also are being reported for drier áreas.
Overnight News: The Delta and Southeast will see mostly dry conditions through Friday, then showers and storms. 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 67.71 ct/lb. ICE certified stocks are now 13,503 bales, from 13,520 bales yesterday. USDA said that net Upland Cotton export sales were 277,600 bales this year and 51,900 bales next year. Net Pima sales were 6,900 bales this year and -1,100 bales next year.
Chart Trends: Trends in Cotton are up with objectives of 6910, 7030, and 7380 December. Support is at 6850, 6790, and 6710 December, with resistance of 6970, 7020, and 7040 December.

FCOJ
General Comments: FCOJ closed mostly lower again yesterday and trends are trying to turn down on the charts. September closed higher as speculators cover short positions before the deliveries start at the end of next week. There has been bearish news for the market this week. Elizabeth Steger estimated Florida production for the coming year at 75.5 million boxes, from 68 million boxes for the previous year. Dreyfus should release its estimates soon. Neilsen said that demand remains soft. 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.
Chart Trends: Trends in FCOJ are mixed. Support is at 129.00, 128.00, and 125.00 September, with resistance at 138.00, 140.00, and 142.00 September.

COFFEE
General Comments: New York closed higher after the First Notice Day for September Contracts, but the move itself was just a small one. London closed lower. The cash market remains very quiet. There has been some rains and flowering has been reported in Brazil. 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. Some producers are still talk 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.
Overnight News: Certified stocks are higher today and are about 1.652 million bags. The ICO composite price is now 123.63 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 71 notices were posted against September Contracts today and that total deliveries for the month are now 115 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 in New York in consolidation trading. It is possible that both markets are making a bottom at this time.. 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 and ideas of big offers keep buyers mostly quiet. An increasing part of the Sugarcane production will likely shift to ethanol on 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 1330, 1310, and 1290 October, and resistance is at 1370, 1390, and 1420 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 378.00, 381.00, and 386.00 October.

COCOA
General Comments: Futures closed a little lower in consolidation trading. The market is holding in a big trading range and is now at the lower end of the range. The charts suggest that a short term bottom is forming. The market is between harvests and no one seems to expect much to happen for another few weeks 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 temperaturas. ICE certified stocks are lower today at 5.109 million bags. ICE said that 57 notices were posted against September contracts today and that total deliveries for the month are now 657 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.

 

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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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