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Morning Softs 09/19/17


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COTTON
General Comments: Cotton was higher on ideas that the crop losses from Harvey and Irma were still being evaluated and as more hurricanes formed in the Atlantic that could hurt crops sooner or later. The storm track for the new systems is not clear, but for now the storm, Maria, is following the path of Irma.. There will probably be some quality losses from the previous storms, and USDA did show deteriorating quality last night. The charts suggest that futures can trade between 7000 and 7500 for a while. Production and yield estimates from USDA were much higher than expected and led to larger than expected ending stocks in the monthly updates last week. USDA was able to show increased production potential instead of a slight decrease that had been expected by much of the trade. Bolls are opening and big rains now could mean even further damage due to the open bolls.
Overnight News: The Delta and the Southeast should be mostly dry. Temperatures should average near to below normal in the Delta and near to above normal in the Southeast. Texas will see mostly dry conditions this week. Temperatures will be above normal. The USDA average price is now 68.16 ct/lb. ICE said that certified stocks are now 4,414 bales, from 4,045 bales yesterday.
Chart Trends: Trends in Cotton are mixed to down with no objectives. Support is at 6930, 6840, and 6830 December, with resistance of 7000, 7040, and 7120 December.

Crop Progress
Date 17-Sep 10-Sep 2016 Avg
Cotton Bolls Opening 44 34 47 51
Cotton Harvested 11 9 6 6
Crop Condition
Very Poor Poor Fair Good Very Good
Cotton This Week 6 8 25 44 17
Cotton Last Week 6 74 26 46 17
Cotton Last Year 4 4 12 3639 9

FCOJ
General Comments: : FCOJ closed higher as more hurricanes started to form in the Atlantic. None of these are slated to hit Florida yet, but the threat is enough to cause prices to jump as there has already been a lot of damage to trees and fruit this year.. Ideas remain that the Orange groves are badly damaged in Florida due to Irma. Ideas are that at least 10% of the crop was lost. Both the daily and weekly charts are now showing up trends. Florida weather is now drier, but showers are still around, and the damage is done. 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 11 delivery notices were posted against September contracts today and that total deliveries are 19 contracts.
Chart Trends: Trends in FCOJ are mixed to up with objectives of 165.00 November. Support is at 146.00, 142.00, and 140.00 November, with resistance at 155.00, 159.00, and 160.00 November.

COFFEE
General Comments: New York closed lower on some long liquidation and some new selling, and London closed higher on what appeared to be fund buying. New York hit some swing targets for the move to cause the long liquidation.. Both markets remain in up trends for now. The weather in Brazil and the condition of the trees is an important market factor as La Nina is coming and Coffee areas are already dry. Early flowering has been reported in Brazil due to early rains, but it has turned dry again. Some producers are worried that the rains created premature flowering and that these flower will fall and hurt overall production potential. There are some reports that trees are defoliating and that would mean less production overall. This is usually a dry time, and most producers say they are not real concerned. But, the market has started to take notice. The cash market remains quiet. Production for the next crop is starting to be offered in Central America as the harvest has started in the region.
Overnight News: Certified stocks are higher today and are about 1.793 million bags. The ICO composite price is now 128.93 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 that11 notices were posted against September contracts today and that total deliveries for the month are now 877 contracts
Chart Trends: Trends in New York are up with objectives of 142.00 December. Support is at 137.00, 135.00, and 128.95 December, and resistance is at 143.00, 145.00 and 147.00 December. Trends in London are mixed to up with objectives of 2030 and 2090 November. Support is at 1990, 1960, and 1920 November, and resistance is at 2010, 2030, and 2060 November.

SUGAR
General Comments: Futures were lower in New York on ideas of big world production. Prices trends are starting to turn up in new York on both the daily and weekly charts with the price action late last week. However, the rally flies in the face of cash market data that showed weakening differentials between whites and raws. Weaker differentials imply either too much production or too little demand  r both. Brazil mills are now processing more for ethanol than Sugar as the ethanol pays better and can get some better tax treatment in the country. Upside price potential is limited as there are still projections for a surplus in the world production, and these projections for the surplus seem to be getting bigger over time. Trends are turning up despite the big production and surplus projections. 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. 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 1530, 1560, and 1630 March. Support is at 1460, 1440, and 1430 March, and resistance is at 1520, 1550, and 1580 March. Trends in London are mixed. Support is at 373.00, 368.00, and 366.00 December, and resistance is at 384.00, 391.00, and 404.00 December.

COCOA
General Comments: Futures closed lower after failing to hold new highs in New York. London remains in a trading range, but price action remains firm in New York even with the weaker close yesterday. Harvest reports are appearing in the wire services, and it looks like good to very good production will be seen this year in West Africa. Cocoa is offered in all countries, although Ivory Coast has sold a big part of their expected production. 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 and said on Friday that production could be over 800,000 tons. 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 4.806 million bags.
Chart Trends: Trends in New York are mixed to up with objectives of 2090 December. Support is at 1950, 1930, and 1880 December, with resistance at 2030, 2090, and 2110 December. Trends in London are mixed to up with objectives of 1510 and 1540 December. Support is at 1460, 1450, and 1430 December, with resistance at 1520, 1550, and 1570 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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