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Morning Softs Report 10/18/17


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COTTON
General Comments: Cotton was higher in consolidation trading. The daily charts show the potential for prices to work lower now, and the trade yesterday did nothing to change this. The weekly charts show down trends and the potential for futures to test strong support near 6500 December with an extension possible to about 6250 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 this week. 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 until showers and storms appear on Sunday and Monday. Temperatures should average mostly above normal. Texas will see mostly dry conditions except for a few showers on Friday and Saturday. Temperatures will be mostly above normal. The USDA average price is now 65.94 ct/lb. ICE said that certified stocks are now 4,565 bales, from 5,705 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.

FCOJ
General Comments: FCOJ closed a little higher in moderate volume trading. The USDA reports last week did no-show the losses that had been feared by the trade, and the prices moved lower. Florida sources told wire services they expect USDA to show further dramatic cuts in production in coming reports, and these ideas are creating new buying interest at current levels. It is possible that production is less 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 are stressed from hot and dry weather.
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.

DJ Florida FCOJ Movement And Pack – Oct 17
In mm ps, (million pounds solid). Source: Florida Department of Citrus (FDOC)
WEEK ENDING: 10/7/2017
Corresponding
Current Week Last
Week Season
10/07/2017 10/8/2016 % Change
CARRY OVER, RECEIPT & PACK
Carry Over
Bulk 185.02 212.24 -12.8%
Retail/Institutional 7.20 6.78 6.1%
Total 192.21 219.03 -12.2%
Pack
Bulk 0.84 0.74 13.3%
Retail/Institutional 1.74 1.47 18.0%
Total Pack 2.58 2.22 16.4%
Reprocessed -2.58 -2.22 16.4%
Pack from Fruit – – NC
Receipts & Losses
Net Gain or Loss 0.11 0.16 -27.8%
Imports – Foreign 3.47 7.95 -56.3%
Domestic Receipts 0.03 – NA
Receipts of Florida Product
from Non-Reporting Entit 0.01 – NA
Chilled OJ used in FCOJ 0.13 – NA
Reprocessed FCTJ – 0.04 -100.0%
Total Carry Over, Receipt & Pack
Bulk 187.03 218.91 -14.6%
Retail/Institutional 8.94 8.26 8.2%
Total 195.96 227.17 -13.7%
MOVEMENT
Bulk
Domestic 3.83 3.78 1.3%
Exports 0.15 0.21 -28.6%
Total (Bulk) 3.98 4.00 -0.3%
Retail/Institutional
Domestic 1.79 1.44 24.3%
Exports – – NC
Total (Retail/Inst) 1.79 1.44 24.3%
Total Movement 5.77 5.44 6.2%
ENDING INVENTORY
Bulk 183.04 214.92 -14.8%
Retail/Institutional 7.15 6.82 4.8%
Ending Inventory 190.19 221.74 -14.2%
Total Same
Total Season Period Last
To Date Season
30-Sep-17 1-Oct-16 % Change
CARRY OVER, RECEIPT & PACK
Carry Over
Bulk 185.02 212.24 -12.8%
Retail/Institutional 7.20 6.78 6.1%
Total 192.21 219.03 -12.2%
Pack
Bulk 0.84 0.74 13.3%
Retail/Institutional 1.74 1.47 18.0%
Total Pack 2.58 2.22 16.4%
Reprocessed -2.58 -2.22 16.4%
Pack from Fruit – – NC
Receipts & Losses
Net Gain or Loss 0.11 0.16 -27.8%
Imports – Foreign 3.47 7.95 -56.3%
Domestic Receipts 0.03 – NA
Receipts of Florida Produ 0.01 – NA
from Non-Reporting Entit 0.13 – NA
Chilled OJ used in FCOJ – 0.04 -100.0%
Reprocessed FCTJ
Total Carry Over, Receipt & Pack
Bulk 187.03 218.91 -14.6%
Retail/Institutional 8.94 8.26 8.2%
Total 195.96 227.17 -13.7%
MOVEMENT
Bulk 3.83 3.78 1.3%
Domestic 0.15 0.21 -28.6%
Exports 3.98 4.00 -0.3%
Total (Bulk)
Retail/Institutional
Domestic 1.79 1.44 24.3%
Exports – – NC
Total (Retail/Inst) 1.79 1.44 24.3%
Total Movement 5.77 5.44 6.2%
ENDING INVENTORY
Bulk 183.04 214.92 -14.8%
Retail/Institutional 7.15 6.82 4.8%
Ending Inventory 190.19 221.74 -14.2%

COFFEE
General Comments: New York was a little higher and London closed a little lower. Trends are still down on the charts in New York. 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. It is dry now after rains were reported a couple of weeks ago. Trees remain stressed and there are concerns that flowers are being aborted. 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.
Overnight News: Certified stocks are higher today and are about 1.858 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 118.79 ct/lb. Brazil will get mostly dry weather, but showers are likely starting Sunday. 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 121.00, 119.00, and 116.00 December, and resistance is at 127.00, 128.00 and 130.00 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 2000, 2020, and 2030 November.

SUGAR
General Comments: Futures were lower in both New York and in London on forecasts for rain in Brazil and on follow through selling. The market remains in an overall trading range, but the price action yesterday implied that a move lower is possible as the market appears to be looking for good demand. There was some talk of Far East demand that is now being filled by India and the Middle East due to higher prices from Thailand. But there does not seem to be any big demand coming from any real direction, especially as China has cut back on imports. 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 through Saturday and scattered showers starting on Sunday.
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 to down with objectives of 357.00, 344.00, and 340.00 December. Support is at 359.00, 354.00, and 348.00 December, and resistance is at 373.00, 377.00, and 380.00 December.

COCOA
General Comments: Futures closed higher in both markets, but held to the recent trading range. The trends turned up again with the price action last week, but prices fell back into the trading range this week and are now searching for a direction. 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 Africa is getting better rains now. 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.
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 4.336 million bags.
Chart Trends: Trends in New York are mixed. Support is at 2030, 2000, and 1990 December, with resistance at 2080, 2100, and 2130 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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The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or futures. The Price Futures Group, its officers, directors, employees, and brokers may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction. Reproduction and/or distribution of any portion of this report are strictly prohibited without the written permission of the author. Trading in futures contracts, options on futures contracts, and forward contracts is not suitable for all investors and involves substantial risks. ©2017



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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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