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Morning Softs Report 10/17/17


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COTTON
General Comments: Cotton was lower on ideas that demand is not good and as the harvest continues. The daily charts show the potential for prices to work lower now. The weekly charts show down trends and the potential for futures to test strong support near 6500 December. Ideas are that the recent weather has been good for maturing crops and harvest activities, and these were backed by the USDA progress and condition reports released last night. 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 and USDA weekly condition reports have reflected some deterioration. Bolls are opening and harvest is expanding under relatively good conditions as it has been relatively dry. The weekly classing report shows that quality is holding after showing somewhat lower quality in the last couple of weeks.
Overnight News: The Delta and the Southeast should get mostly dry weather. Temperatures should average mostly above normal. Texas will see mostly dry conditions. Temperatures will be mostly above normal. The USDA average price is now 65.70 ct/lb. ICE said that certified stocks are now 6,705 bales, from 6,584 bales yesterday.
Chart Trends: Trends in Cotton are mixed to down with objectives of 6740 and 6580 December. Support is at 6740, 6700, and 6660 December, with resistance of 6860, 6900, and 6930 December.

Crop Progress
Date 15-Oct 8-Oct 2016 Avg
Cotton Bolls Opening 82 72 88 86
Cotton Harvested 31 25 29 26
Crop Condition
Very Poor Fair Good Very Good
Cotton This Week 5 8 29 43 15
Cotton Last Week 8 7 25 42 18
Cotton Last Year 4 13 36 38 9

FCOJ
General Comments: FCOJ closed a little higher. The USDA reports last week showed much less production, but not the losses that had been feared by th trade. Florida sources told wire services they expect USDA to show further dramatic cuts in production in coming reports, but the reports showed that there will be some oranges for processing. This is possible as USDA did not have a chance to do a complete survey of the damage. Most of the loss is coming from fruit drop and not from the rains of Irma. Chart trends turned down for the short-term after the big really last week, but prices overall should remain Rather strong due to the production losses. Ideas remain that the Orange groves are badly damaged in Florida due to Irma. Crops in many areas were almost completely destroyed. Other areas suffered losses of 50% or more of the crop. Some growers say that trees will be stressed again next year due to the winds and rains from Irma. 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.
Overnight News: Florida should get daily chances for showers and storms and near to above normal temperatures. Brazil should get mostly dry conditions and near to above normal temperatures.
Chart Trends: Trends in FCOJ are mixed to down with objectives of 144.00 and 135.00 November. Support is at 150.00, 146.00, and 142.00 November, with resistance at 155.00, 160.00, and 165.00 November.

COFFEE
General Comments: New York and London both closed lower and trends turned down on the charts in New York as futures made new lows for the move. London is still holding a trading range, but coud also be turning trends down at this time. Ideas that the coming Brazil crop could be big remain, even through Coffee areas remain generally dry. The rains seen a couple of weeks ago in Brazil has promoted flowering for the next crop, and the flowing was reported to be very good. However, it is dry again now and has been dry for a couple of weeks as a high pressure ridge has moved into the northern part of the country. The high could move away by the end of the month and more rains might appear. Most areas will need to see some consistent rainfall now to keep the potential for a big crop alive as trees need to recover from stress from the production year last year and also the cold and dry Winter. The weather in Brazil and the condition of the trees is getting attention as La Nina is coming and Coffee areas are already dry. There are still reports of defoliation to trees, and that does not support ideas of big production potential down the road. There will be a lot of talk about the rains and what it means to production potential for the next few weeks.
Overnight News: Certified stocks are higher today and are about 1.856 million bags. GCA stocks are now 7.189 million bags, from 7.266 million at the end of August. The ICO composite price is now 118.75 ct/lb. Brazil will get mostly dry weather, but as few light showers are possible over the weekend. Temperatures should average near to above normal. Colombia should get scattered to isolated showers. Central America and southern Mexico should get scattered showers and storms. Temperatures should average near to above normal.
Chart Trends: Trends in New York are down with no objectives. Support is at 124.00, 119.00, and 116.00 December, and resistance is at 128.00, 130.00 and 133.00 December. Trends in London are mixed to down with objectives of 1960, 1920, and 1780 November. Support is at 1960, 1930, and 1910 November, and resistance is at 2020, 2030, and 2040 November.

SUGAR
General Comments: Futures were lower in both New York and in London on forecasts for rain in Brazil and general selling seen in commodities markets. The market remains in an overall trading range, but the price action yesterday implied that a move lower is possible. The fundamental side of the market remains mostly negative due to ideas of big world production. Brazil has turned dry after recent rains, and more rain is needed after the dry Winter. The Sugar areas look to stay dry and very warm for the next week or so, but there are forecasts for weather trends to change by the end of the month that could give Sugar areas better rains at that time. 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.
Overnight News: Brazil should feature warm and dry weather.
Chart Trends: Trends in New York are mixed. Support is at 1400, 1380, and 1350 March, and resistance is at 1450, 1470, and 1490 March. Trends in London are mixed. Support is at 368.00, 359.00, and 354.00 December, and resistance is at 377.00, 380.00, and 384.00 December.

COCOA
General Comments: Futures closed lower. The trends turned up again with the price action last week, but prices fell back into the trading range yesterday and the potential uptrend might have been lost. Traders hope for gains in the grind in North America and Asia after a big European grind was reported last week. World production ideas remain high. Harvest reports show good to very good production will be seen this year in West Africa. Ghana and Ivory Coast expects a very good crop this year. Nigeria and Cameroon are reporting good yields on the initial harvest, and also good quality. 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. Traders talk of increased demand to go against big world production as prices are now attractive for grinders and chocolate manufacturers and as world economies are improving.
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 4.360 million bags.
Chart Trends: Trends in New York are mixed. Support is at 2000, 1990, and 1970 December, with resistance at 2100, 2130, and 2150 December. Trends in London are mixed. Support is at 1530, 1520, and 1480 December, with resistance at 1570, 1590, and 1600 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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