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Morning Softs. 09/07/17


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DJ U.S. July Coffee, Cocoa Imports-Sep 6
In kilograms from the U.S. Commerce Department, converted to pounds
by Dow Jones.
—-Jul 2017—- —-Jun 2017—-
coffee kilograms pounds kilograms pounds
coffee, unroasted 121,583,891 268,092,480 132,837,441 292,906,557
coffee, roasted 8,065,803 17,785,096 7,749,562 17,087,784
coffee, soluble
instant 3,337,947 7,360,173 3,661,998 8,074,706
Cocoa
cocoa beans 22,636,141 49,912,691 26,951,691 59,428,479
sweetened bars/block
10 lbs or over 3,702,029 8,162,974 3,194,041 7,042,860
for retail candy 0 0 314 692
cocoa butter 8,796,798 19,396,940 9,153,619 20,183,730
cocoa paste,
not defatted 1,840,735 4,058,821 2,956,721 6,519,570
cocoa paste
defatted 5,693,829 12,554,893 2,822,000 6,222,510
cocoa powder,
unsweetened 11,171,984 24,634,225 11,379,821 25,092,505
cocoa powder,
sweetened 41,712 91,975 35,944 79,257
confectioners
coating 2,370,470 5,226,886 2,284,438 5,037,186
candy containing
chocolate 11,835,813 26,097,968 12,425,314 27,397,817

DJ World Food Prices Down 1.3% in August Due to Cheaper Grain, Sugar, Meat
By David Hodari
LONDON–World food prices fell in August due to less expensive cereals, sugar and meat prices, the United Nations’ Food and Agriculture Organization said Thursday.
The FAO’s food price index fell by 1.3% last month from July, up 6% on its August 2016 level.
The serial price index dropped 5.4% from July, with fears over hot, dry weather across North America, Europe and Australia giving way to cooler, wetter weather and a return to a focus on high global supplies, further boosted by increased Black Sea production during August. Rice prices, meanwhile, were steady, the U.N. body’s report said.
Sugar prices fell back too, dropping 1.7% after a sharp rally in July that was driven by speculation and currency considerations. Heavy global supply and the prospect of increased production in Brazil, India and Thailand were key drivers, the report noted.
Meat prices fell 1.2% after remaining flat in July, with falling bovine meat prices driving the decrease. That came on the back of increased Australian exports and stronger prospects for U.S. domestic production.
Those lower cereal, sugar and meat prices outweighed higher dairy and vegetable oil prices.
Dairy prices continued to rise, increasing 1.4% on month, hitting a level 42% higher than they were the previous year. The FAO report pointed out that this was still 20% below the peak reached in February 2014. More expensive butter and whole milk powder were drivers, the report said.
Vegetable oil prices rose 2.5%, after two weak months, thanks to higher palm and soybean oil prices.

COTTON
General Comments: Cotton was a little lower in correction trading, but the overall market remains strong as the market tries to assess the damage to crops due to Hurricane Harvey and prepares for Hurricane Irma. 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, but most of the losses would come from unharvested Cotton and Cotton in storage in Texas and a Little bit in Louisiana. 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, and Cotton in most of the Delta and Southeast should have escaped damage and loss. Irma is targeting the southeast US starting with Florida this weekend. For now, the system looks to mainly move up the Atlantic Coast to the east of a lot of Cotton areas. These areas could see some big rains, but might escape damaging winds. A little change in direction could aim the worst of the storm at Cotton areas of either Georgia or North Carolina, but for now North Carolina Cotton could be the most affected. Bolls are opening and big rains now could mean even further damage due to the open bolls. Both are big producing states. It seems that Cotton is a big crop that is getting smaller this year as the storms come.
Overnight News: The Delta and Southeast will see mostly dry weather, although the Southeast could feel the impacts from Irma starting Monday. 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 be variable. The USDA average price is now 73.19 ct/lb. ICE said that certified stocks are now 8,777 bales, from 9,293 bales yesterday.
Chart Trends: Trends in Cotton are up with objectives of 7500, and 7580 December. Support is at 7370, 7320, and 7230 December, with resistance of 7580, 7720, and 7840 December.

FCOJ
General Comments: : FCOJ closed lower after pushing close to important resistance on the charts at 150.00 November. No one is sure exactly where the hurricane will go this weekend, but all indications are that much of Florida can expect big rains and big winds as the storm passes through. The storm is still several days away from hitting the US, and there is potential for a front to move south and east from the Midwest this week to protect the eastern seaboard. The storm should get to the US or at least close to it by late this weekend. The Eastern part of the state looks to get the most damage at this time, and there is less citrus grown in this area. However, areas near Lake Okeechobee could also see some extreme winds that could cause fruit drop and also some extreme rains that could damage the quality of the fruit. Both the daily and weekly charts show sideways trends. The market price remains generally weak due to ideas of better production potential for the coming harvest and reports of weak demand. Florida weather until now is very good as it is now drier, but showers are still around. The demand side remains weak and there are plenty of supplies in the US. Trees now are showing fruit of good sizes and the market had been expecting bigger production this year. Brazil crops remain in mostly good condition and production estimates are climbing after recent rains.
Overnight News: Florida should get scattered showers and storms 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 to up with objectives of 150.00 and 165.00 November. Support is at 140.00, 138.00, and 135.00 November, with resistance at 146.00, 149.00, and 150.00 November.

COFFEE
General Comments: New York closed slightly lower after trading both sides of unchanged, and London closed lower. New York is holding to a short-term trading range, but trends are down in London. There have been some rains and early flowering has been reported in Brazil. Pictures show that flowering is off to a very good start. Coffee areas are dry again, and some producers are worried that the rains came too early and created premature flowering. The flowers could drop and reduce the production potential. There is also talk that the trees are old and not able to withstand stress and that lower production should be expected no matter what happens. This is usually a dry time, and most producers say they are not real concerned. Commercials have been buyng on a scale down basis. The cash market remains very quiet on reports of weaker demand. Production for the next crop is starting to be offered in Central America. 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 1.732 million bags. The ICO composite price is now 120.71 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 down with objectives of 1920 and 1780 November. Support is at 1910, 1890, and 1860 November, and resistance is at 1980, 2030, and 2060 November.

SUGAR
General Comments: Futures were higher, but prices remain in a short-term trading range. The market is watching Hurricane Irma. Irma appears headed to the southeast US and could hit Sugar production areas in Florida. It is currently a very powerful hurricane and will cause a lot of damage. It has already hurt some areas in the islands. The problems around Houston have improved as the weather has turned drier, and production and refining will be coming on-line all week. It has been a great recovery considering all of the flooding seen last week, and it could mean that ethanol and bio fuels demand does not increase as much as expected. The market expects firmer prices over time in part due to the moves in Brazil to increase ethanol production through higher gas prices and as the Indian harvest could be delayed due to wet conditions that would delay sugarcane harvesting. Trends are mixed, but the market has a positive feel to it. 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. Support is at 1430, 1410, and 1380 March, and resistance is at 1500, 1550, and 1580 March. Trends in London are mixed. Support is at 371.00, 366.00, and 360.00 December, and resistance is at 384.00, 391.00, and 404.00 December.

COCOA
General Comments: Futures closed a little lower, and trends started to turn down in London. New York remains in a sideways range. Harvest reports are starting to appear in the wire services, and it looks like good to very good production will be seen this year in West Africa. Ivory Coast has now sold 1.32 million tons of Cocoa from the next crop into the world market, so part of the production in all of West Africa is now priced. The charts suggest that a short-term bottom has formed and traders talk now of increased demand to go against big world production as prices are now attractive for grinders and chocolate manufacturers. Ivory Coast is expected to have a big crop starting harvest this Fall, but smaller than last year. Ghana also expects a good crop this year. Nigeria and Cameroon are reporting good yields on the initial harvest. 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 4.970 million bags. ICE said that 14 notices were posted against September contracts today and that total deliveries for the month are now 853 contracts.
Chart Trends: Trends in New York are mixed. Support is at 1880, 1850, and 1830 December, with resistance at 1940, 1980, and 2010 December. Trends in London are mixed to down with objectives of 1460 and 1380 December. Support is at 1480, 1460, and 1450 December, with resistance at 1520, 1550, and 1570 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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