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Morning Softs. 09/01/17


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COTTON
General Comments: Cotton was slightly higher as the market tried to assess the damage to crops due to Hurricane Harvey. The storm has moved out of Houston and now is hurting crops in the Delta. Texas crops potentially lost the quality and harvest progress in some areas of the state. No one is willing to say if any Cotton was lost or how much was lost as the catastrophic rains are still around. Reports indicate that about 600,000 acres of high quality Cotton could be damaged or destroyed in southern parts of the state, but most ideas are that 300,000 acres or less will be lost. There is talk that at least 400,000 bales of Cotton were destroyed in the storm. Cotton in the Texas Panhandle was not affected in any big way. Trends are up on the daily charts, but futures are trying to push past the recent highs and are having trouble getting the job done. 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. Heavy monsoon rains are reported in India and Pakistan this week.
Overnight News: The Delta and Southeast will see showers and storms today and tomorrow, then dry weather. Temperatures should average near to below normal in the Delta and near to above normal in the Southeast. Texas will see mostly dry conditions. Temperatures will average near normal. The USDA average price is now 70.06 ct/lb. ICE said that certified stocks are now 9,293 bales, from 9,473 bales yesterday.
Chart Trends: Trends in Cotton are up with objectives of 7250, 7500, and 7580 December. Support is at 7040, 7000, and 6940 December, with resistance of 7120, 7220, and 7280 December.

DJ On-Call Cotton – Aug 31
As of Aug 25. On-call positions represent spot cotton sold to or
purchased from a merchant, based on New York cotton futures contracts
of 500-pound bales. Prices are not yet fixed against these contracts.
Source: CFTC
*-denotes changes from the previous week are based on revised data from
last week.
Call Previous Change Call Previous Change
Sales Purchases
Oct 17 0 0 0 0 0 0
Dec 17 30,260 30,389 -129 21,839 21,589 250
Mar 18 34,933 32,716 2,217 3,546 3,535 11
May 18 17,550 17,068 482 582 470 112
Jul 18 18,653 18,118 535 1,167 1,026 141
Oct 18 0 0 0 0 0 0
Dec 18 8,873 8,173 700 8,685 8,599 86
Mar 19 1,558 1,447 111 0 0 0
May 19 920 920 0 0 0 0
Jul 19 865 865 0 0 0 0
Dec 19 549 549 0 2,517 2,517 0
Mar 20 549 549 0 0 0
Total 114,710 110,794 3,916 38,336 37,736 600
Open Change
Int
Oct 17 204 181 23
Dec 17 146,142 147,607 -1,465
Mar 18 56,483 53,178 3,305
May 18 6,594 6,448 146
Jul 18 5,141 5,309 -168
Oct 18 1 1 0
Dec 18 11,564 11,192 372
Mar 19 254 255 -1
May 19 0 0 0
Jul 19 133 133 0
Dec 19 26 26 0
Mar 20 0 0 0
Total 226,542 224,330 2,212

FCOJ
General Comments: FCOJ closed higher as Hurricane Irma formed and quickly developed into a category 3 storm in the Atlantic. It is still faro ut to see and presents no threat for now. The expected track of the storm would keep it to the south of Florida, but it would not take much of a change to have the storm come to the state and possibly as a major hurricane. The market price remains generally weak due to ideas of better production potential for the coming harvest and reports of weak demand. Weak demand has been a feature for months as many consumers turn away from juice for various reasons. Florida 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. Chart trends imply that sideways trading can continue.
Overnight News: Florida should get showers and storms today and tomorrow, then dry conditions and near to above normal temperatures. Brazil should get mostly dry conditions and near to above normal temperatures. ICE said that 0 delivery notices were posted against September contracts today and that total deliveries are 0 contracts.
Chart Trends: Trends in FCOJ are mixed. Support is at 132.00, 129.00, and 128.00 November, with resistance at 136.00, 138.00, and 140.00 November.

COFFEE
General Comments: New York closed higher and London closed a little lower as deliveries against September contracts are set to begin in London. There have been some rains and flowing has been reported in Brazil. Pictures circulated on the internet show that flowering is off to a very good start. However, Coffee areas are dry again. producers are worried that the rains came too early and created premature flowering. The flowers could die and fall and that would mean yield losses are possible for the coming crop. Commercials are said to be the best buyers. The cash market remains very quiet. 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. The markets are quiet in Central America and producers are discouraged. There is still some Coffee to be sold, but buying interest is thin at beast and prices and differentials are not favorable. Vietnamese sellers remain quiet with good prices as it is hard to buy from producers right now. Seasonal chart studies suggest that a rally in Coffee futures is likely in the coming weeks
Overnight News: Certified stocks are higher today and are about 1.707 million bags. The ICO composite price is now 123.45 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 0 notices were posted against September Contracts today and that total deliveries for the month are now 564 contracts
Chart Trends: Trends in New York are mixed. Support is at 127.00, 126.00, and 119.00 December, and resistance is at 132.00, 133.00 and 135.00 December. Trends in London are mixed. Support is at 2060, 2030, and 1980 November, and resistance is at 2120, 2140, and 2150 November.

SUGAR
General Comments: Futures were higher in response to the rally in petroleum futures. Ideas are that higher petroleum prices that are likely from the hurricane in Houston could mean more demand for ethanol. There was also talked that Petrobras will raise Brazilian gasoline prices and that would definitely encourage the use of more ethanol and discourage production of Sugar. The market expects firmer prices over time in part due to the moves in Brazil and as the Indian harvest could be delayed due to wet conditions that would delay sugarcane harvesting. Trends have turned up. 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 to heavy rains in many areas. 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: Brazil should feature warm and dry weather for the next week.
Chart Trends: Trends in New York are mixed to up with objectives of 1510, 1540, and 1560 March. Support is at 1460, 1430, and 1410 March, and resistance is at 1550, 1580, and 1620 March. Trends in London are mixed. Support is at 384.00, 376.00, and 371.00 December, and resistance is at 391.00, 404.00, and 412.00 December.

COCOA
General Comments: Futures closed a little higher after some follow through selling seen early in the session dried up. Cocoa is holding at Support areas, but not much more. Ivory Coast has now sold 1.32 million tons of Cocoa from the next crop into the world market, meaning that a good chunk of the production in all of West Africa is now priced. It also means less selling pressure is coming at and after the main crop harvest this Fall. However, the buyers might not need to buy futures, either, as they have already bought the physical product. The charts suggest that a short-term bottom has formed and traders talk now of increased demand to go against big world production. The market is between harvests from West Africa Ivory Coast is expected to have a big crop starting harvest this Fall, but it should be smaller than the record production of the last year. Ghana also expects a good crop this year. The growing conditions in other parts of the world are generally good. East African could use more rain, but Cocoa is growing. 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 5.009 million bags. ICE said that 0 notices were posted against September contracts today and that total deliveries for the month are now 839 contracts.
Chart Trends: Trends in New York are mixed. Support is at 1900, 1880, and 1850 December, with resistance at 1950, 2010, and 2030 December. Trends in London are mixed. Support is at 1500, 1480, and 1460 December, with resistance at 1570, 1590, and 1620 December.

DJ Cocoa Prices Steady After ICCO Forecast Update — Market Talk
0920 GMT – London-traded cocoa futures have relinquished their early morning gains and now sit 0.2% lower at GBP1519 a ton. This, after the International Cocoa Organization released updated forecasts for global supply in 2016/17 late Thursday, trimming its forecast for global surplus to 371,000 tons from 382,000 tons. That revision includes an uptick in forecast 2016/17 cocoa grinding, which the ICCO increases by 0.02 million tons to 4.28 million — which would constitute a 3.7% increase on the previous October-September season. Asia, Oceania, and Africa are key drivers of those higher grinding forecasts, the ICCO says. The body also ups its expectations for global production by 8,000 tons to 4.7 million tons — constituting an 18.1% year-on-year increase — and for the Ivory Coast to 2.01 million tons. That would see year-on-year growth of 27.2% for the Ivorian crop.(david.hodari@wsj.com; @davidhodari)
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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