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Morning Softs. 09/26/17


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COTTON
General Comments: Cotton was higher on ideas that USDA could show more deterioration in conditions in its reports last night.. Conditions ratings were marginally lower and the harvest progress is slightly ahead of the average. The harvest ahead seems to be the most important factor as USDA is expecting a huge crop, but storms have damaged production potential since the last report. The charts suggest that futures can trade between 6500 and 7500 for a while. Production and yield estimates from the country will be important after the storms hit Texas and the Southeast as there could have been yield and quality losses. 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 harvest is expanding under relatively good conditions as it has been dry. Some rains are forecast for Texas production areas this week, but the Delta and Southeast look to stay mostly dry to allow the harvest to gather speed..
Overnight News: The Delta and the Southeast should be mostly dry. Temperatures should average above normal. Texas will see daily  chances for showers and some significant precipitation this week and drier weather this weekend. Temperatures will be above normal. The USDA average price is now 67.86 ct/lb. ICE said that certified stocks are now 1,772 bales, from 1,772 bales yesterday. ICE said that 0 contracts were posted for delivery against October futures and that total deliveries for te month are now 0 contracts. China imported 83,913 tons of Cotton in August, up 20% from last year. Calendar year to date imports are now 811,843 tons, up 39% from last year.
Chart Trends: Trends in Cotton are mixed. Support is at 6870, 6830, and 6790 December, with resistance of 7000, 7040, and 7120 December.

Crop Progress
Date 24-Sep 17-Sep 2016 Avg
Cotton Bolls Opening 57 44 61 61
Cotton Harvested 14 11 9 9
Crop Condition
Very Poor Fair Good Very Good
Cotton This Week 6 8 26 43 17
Cotton Last Week 6 8 25 44 17
Cotton Last Year 4 12 36 38 10

FCOJ
General Comments: FCOJ closed lower as the long liquidation and new selling continued, but closed well off the lows on ideas that the market had moved too fast and too far for the current conditions. There are still reasons to think that prices need to hold generally higher for quite a long time. 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, and many say the damage and losses are much more extensive than that. Some growers say that trees will be stressed again next year due to the winds and rains from Irma. Florida weather is now drier, but showers are still around. The demand side remains weak and there are plenty of supplies in the US. Trees that are still alive now are showing fruit of good sizes, although many have lost a lot of the fruit. Brazil crops remain in mostly good condition and production estimates are climbing after recent rains.
Overnight News: Florida should get mostly dry conditions and near to above normal temperatures. Brazil should get mostly dry conditions and near to above normal temperatures.
Chart Trends: Trends in FCOJ are down with objectives of 135.00 November. Support is at 142.00, 140.00, and 138.00 November, with resistance at 147.00, 152.00, and 157.00 November.

COFFEE
General Comments: New York closed lower and London closed slightly higher in response to some forecasts for rains to improve in Brazil by the end of this week. The rains would promote flowering for the next crop and might sabe some flowers that came from some early rains several weeks ago. However, the rains are expected to be spotty and the coverage is expected to be poor. At least there will be some rain. London is holding its rally better than New York as New York has moved back to support areas on the charts 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 flowers will fall and hurt overall production potential. There are some reports that trees are defoliating and that would mean less production overall. The cash market remains quiet and tight. Production for the next crop is starting to be offered in Central America as the harvest has started.
Overnight News: Certified stocks are near unchanged today and are about 1.805 million bags. The ICO composite price is now 124.90 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.
Chart Trends: Trends in New York are mixed. Support is at 129.00, 127.00, and 126.00 December, and resistance is at 136.00, 139.00 and 143.00 December. Trends in London are mixed to up with objectives of 2030 and 2090 November. Support is at 1960, 1920, and 1910 November, and resistance is at 2040, 2060, and 2080 November.

SUGAR
General Comments: Futures were lower in both New York and London on more forecasts for rains in Brazil production areas. The precipitation is expected by the end of the week, and initially will provide poor coverage. But it is a sign that the rainy season is coming and ideas are that production potential for Brazil can now start to improve. The rains come as the market thinks more and more about La Nina and the potential for drought in pasts of Brazil this year. Cash markets show weakening differentials between whites and raws, so London remains the weaker futures market. Weaker differentials imply either too much production or too little demand or both. Brazil mills are now processing more for ethanol than Sugar as the ethanol pays better and processors 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 bigger. Trends are sideways in New York and sideways to down in London.
Overnight News: Brazil should feature warm and dry weather for the next week. China imported 196,578 tons of Sugar in August, down 45% from last year. Calendar year to date imports are now 1.7 million tons, down 21% from last year.
Chart Trends: Trends in New York are mixed. Support is at 1430, 1410, and 1380 March, and resistance is at 1490, 1520, and 1550 March. Trends in London are mixed to down with objectives of 357.00 and 340.00 December. Support is at 360.00, 354.00, and 348.00 December, and resistance is at 372.00, 375.00, and 384.00 December.

DJ Brazil’s Center-South Region Boosted Sugar Production in Early September
By Jeffrey T. Lewis
SAO PAULO–Brazilian sugar mills in the country’s center-south region crushed more cane in the first half of September compared with a year earlier, according to industry group Unica.
Center-south mills crushed 45.4 million metric tons of cane in the period, a rise of 20% from the same period a year earlier. They produced 3.1 million tons of sugar, up 29.2%, and made 2.1 billion liters of ethanol, an increase of 30.3%.
The production mix for the first half of this month was 48% sugar to 52% ethanol. A year earlier, the mix was 48.1% sugar and 51.9% ethanol.
Brazil is the world’s biggest sugar producer and exporter, and the center-south grows about 90% of the country’s cane.
In the season from April 1 through mid-September, mills in the region crushed 427 million tons of cane, down 1.6% from the same period a year earlier. Sugar production rose 5.9% to 26.4 million tons, and ethanol output fell 4.2% to 17.4 billion liters.
The production mix for the season through mid-September was 48.4% sugar to 51.6% ethanol. A year earlier, the mix was 45.9% sugar and 54.1% ethanol.

COCOA
General Comments: Futures closed lower after trading both sides of unchanged. Harvest reports show good to very good production will be seen this year in West Africa, and these ideas were reinforced by new wire seriver reports yesterday. 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. New grind data should be released next month. 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 4.683 million bags.
Chart Trends: Trends in New York are mixed. Support is at 1950, 1930, and 1880 December, with resistance at 2000, 2020, and 2050 December. Trends in London are mixed. Support is at 1460, 1450, and 1430 December, with resistance at 1510, 1520, and 1550 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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