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Morning Softs Report 10/20/17


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COTTON
General Comments: Cotton was mostly a little lower despite a positive export sales report. The daily charts show the potential for prices to work lower as the harvest continues in the US. 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. 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.
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. Temperatures will be mostly above normal. The USDA average price is now 65.61 ct/lb. ICE said that certified stocks are now 2,995 bales, from 3,586 bales yesterday.
Chart Trends: Trends in Cotton are mixed to down with objectives of 6580 December. Support is at 6700, 6660, and 6630 December, with resistance of 6830, 6860, and 6900 December.

DJ On-Call Cotton – Oct 19
As of Oct 13. On-call positions represent spot cotton sold to or
purchased from a merchant, based on New York cotton futures contracts
of 500-pound bales. Prices are not yet fixed against these contracts.
Source: CFTC
*denotes changes from the previous week are based on revised data from
last week.
Call Previous Change Call Previous Change
Sales Purchases
Oct 17 0 0 0 0 0 0
Dec 17 26,331 27,224 -893 15,980 16,350 -370
Mar 18 41,915 40,317 1,598 5,538 5,527 11
May 18 22,753 22,301 452 661 553 108
Jul 18 23,787 22,055 1,732 1,231 1,209 22
Oct 18 0 0 0 0 0 0
Dec 18 13,915 13,422 493 9,710 9,769 -59
Mar 19 4,268 4,267 1 529 528 1
May 19 1,306 1,306 0 0 0 0
Jul 19 1,614 1,570 44 0 0 0
Dec 19 2,284 2,283 1 3,479 3,478 1
Mar 20 843 842 1 147 146 1
Total 139,016 135,587 3,429 37,275 37,560 -285
Open Change
Int
Oct 17 0 31 -31
Dec 17 123,308 128,439 -5,131
Mar 18 72,721 69,328 3,393
May 18 10,245 9,741 504
Jul 18 6,946 6,361 585
Oct 18 1 1 0
Dec 18 16,129 15,522 607
Mar 19 337 339 -2
May 19 4 1 3
Jul 19 167 167 0
Dec 19 44 44 0
Mar 20 0 0 0
Total 229,902 229,974 -72

FCOJ
General Comments: FCOJ closed higher and appear to be developing a trading range. Futures are still reacting to the USDA reports of last week that showed big production loss potential from the hurricane, but not the losses expected by the trade. 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. 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. Support is at 149.00, 146.00, and 142.00 November, with resistance at 155.00, 160.00, and 165.00 November.

COFFEE
General Comments: Both markets were higher yesterday on what appeared to be speculative buying. Trends are still mostly down on the charts in New York, but an increasing amount of the trade is interested in buying the break and establishing long positions. London charts show the potential for an up trend. Ideas that the coming Brazil crop could be big remain, even through Coffee areas remain generally dry. It is dry now, but some showers are possible again this weekend. However, forecasts yesterday cut the amount of precipitation that Coffee areas might get and also the coverage. 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 1.866 million bags. The ICO composite price is now 120.82 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 mixed to down with no objectives. Support is at 125.00, 123.00, and 121.00 December, and resistance is at 128.00, 130.00 and 133.00 December. Trends in London are mixed to up with objectives of 2030, 2090, and 2090 November. Support is at 2000, 1970, and 1960 November, and resistance is at 2040, 2060, and 2080 November.

SUGAR
General Comments: Futures were a little higher in both markets in range trading. There really has not been any news to push prices much in one direction or the other, but traders remain generally bearish on ideas of strong world production and lackluster 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. Some showers could appear this weekend. China has had some variable weather that could cut production, but still has plenty of Sugar in storage. 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. Support is at 366.00, 359.00, and 354.00 December, and resistance is at 377.00, 380.00, and 384.00 December.

COCOA
General Comments: Futures closed sharply higher in New York and in London as the North American grind was expected to be bullish. The data did show an increase in demand, but not as much as some traders had hoped for. The trends are now up in New York and are turning up in London. Traders hope for gains in the grind in Asia after a big European grind was reported last week and a solid North American grind was reported yesterday afternoon. 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 4.308 million bags.
Chart Trends: Trends in New York are up with objectives of 1110, 2280, and 2370 December. Support is at 2100, 2070, and 2030 December, with resistance at 2150, 2210, and 2230 December. Trends in London are mixed. Support is at 1560, 1530, and 1520 December, with resistance at 1600, 1630, and 1650 December.

UPDATE 1-North American Q3 cocoa grind at 3-year top but below expectations – Reuters News
19-Oct-2017 04:22:25 PM
Adds milestone, expectations to paragraph 1, background
NEW YORK, Oct 19 (Reuters) – North American cocoa grinding rose to a three-year high in the third quarter of 2017, data from the National Confectioners Association (NCA) showed on Thursday, but the increase was below expectations.
Cocoa processors in the United States, Canada and Mexico reported grinding 125,263 tonnes of beans from July through September, the highest since 2014 and up 0.68 percent from the third quarter of 2016, NCA data showed.
Traders’ estimates ahead of the data called for grinding to be up 2 percent to 3 percent versus the third quarter 2016. The slightly higher data for North America followed a 3 percent rise in Europe to a six-year high at 353,544 tonnes. (Full Story)
Cocoa grinding reflects demand for chocolate’s key ingredient and quarterly data for cocoa processing in Asia is due on Friday, with expectations ranging from 8 to 10 percent higher.
During the third quarter, New York cocoa futures prices CCc1 rose 7.4 percent, the strongest quarterly gain in more than two years that lifted prices above a 10-year low reached in June as expectations shifted to less plentiful supplies in the 2017/18 crop year.
London futures LCCc1, however, closed the third quarter down 1.1 percent, marking the fifth straight weak quarter as the firm British pound GBP= pressured prices of the sterling-denominated market.
The nine companies that took part in the North American survey are: Barry Callebaut AG BARN.S, Blommer Chocolate Co, Cargill Cocoa & Chocolate Co, ECOM, Ghirardelli Chocolate Co, Guittard Chocolate Co, Hershey Co HSY.N, Mars Wrigley Confectionery and Nestle SA NESN.S.
(Reporting by Marcy Nicholson; Editing by James Dalgleish)
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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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